China's Tightened Crypto Ban: Beijing Extends Control to Overseas Activities

Total Control: China Demonstrates How Far a State Crypto Ban Can Reach

While Western nations grapple with regulatory frameworks, China is demonstrating a fundamental alternative with its latest tightening of anti-crypto policy: the complete rejection of decentralized digital currencies outside state control. The statement published on February 6, 2026, by eight Chinese authorities marks a new dimension—for the first time, companies operating abroad that are controlled by Chinese actors are explicitly included in the ban policy. This extraterritorial expansion shows that Beijing is determined to prevent any attempts at circumvention.

The tightening comes during a phase of extreme market volatility, with Bitcoin having lost over 40 percent since its October high and the entire crypto market having shed approximately $2 trillion in market capitalization according to Bloomberg ^[1]. The timing raises questions: Is China exploiting market weakness for a political offensive, or is it responding to actually increased activities by Chinese investors in the crypto sector?

The Facts

The Chinese central bank, together with seven other state authorities—including the ministries of public security and industry and information technology, the National Development and Reform Commission, and four supervisory agencies—has published a "Notice on Further Prevention and Handling of Risks Related to Virtual Currencies" ^[2]. This statement not only reaffirms the Bitcoin ban in place since 2021 but significantly expands its scope.

At the center of the new measures are two areas: yuan-based stablecoins and the tokenization of real-world assets (RWAs). The issuance of stablecoins pegged to the yuan abroad is strictly prohibited without explicit approval from the relevant authorities ^[1]. The Chinese government's reasoning is clear: such activities endanger the country's monetary sovereignty and financial stability ^[2]. The only permitted digital currency remains the e-CNY, China's state digital currency (CBDC) ^[2].

The scope of the bans is comprehensive. Activities classified as illegal financial activities include: the issuance of virtual currencies, the exchange of legal tender into cryptocurrencies, trading in related financial products, information and settlement services for crypto transactions, token financing, and the tokenization of real assets including related IT services ^[2]. The authorities explicitly emphasize that cryptocurrencies such as Bitcoin, Ether, and stablecoins have no legal status as means of payment in China ^[1].

Particularly notable is the extraterritorial dimension of the new regulations. While foreign companies remain prohibited from offering crypto services to Chinese customers on the mainland, the bans now expressly also apply to companies abroad controlled by Chinese actors, including subsidiaries and joint ventures ^[2]. Domestic companies and their controlled foreign entities may not issue cryptocurrencies abroad without authorization ^[1].

Additionally, operational details are regulated: company names and business areas may no longer contain certain terms, including "virtual currency," "cryptocurrency," "stablecoins," "tokenization of real-world assets," or "RWA" ^[2]. The authorities also announce strict legal measures against fraud, money laundering, pyramid schemes, and the continuation of decisive action against crypto mining ^[2].

Analysis & Context

The current tightening is less surprising than its specific orientation. China has pursued an uncompromising anti-crypto policy for years—from the 2021 mining ban, which triggered a global hashrate migration, to repeated crackdowns on exchanges and traders. What distinguishes this statement, however, is the explicit inclusion of offshore structures and the clear positioning against stablecoins and tokenized assets.

The focus on yuan-based stablecoins is strategically significant. While dollar-pegged stablecoins like USDT and USDC dominate the global crypto ecosystem and effectively function as digital dollar exports, China clearly wants to prevent similar structures from undermining control over the yuan. The message is unambiguous: digitization of currency yes—but exclusively under state control through the e-CNY. This stands in fundamental opposition to Bitcoin's philosophy of decentralized, censorship-resistant value storage.

The extraterritorial expansion could bring practical enforcement problems, but sends a clear signal to Chinese entrepreneurs and investors: geographic arbitrage through relocation abroad will not be tolerated. This fundamentally distinguishes China's approach from other jurisdictions that, while regulating, do not want to fundamentally suppress innovation. For Bitcoin itself, the direct impact is limited—China's 2021 mining exodus has already shown that the network is resilient to state intervention. For Chinese citizens, however, the tightening means that legal participation in the global Bitcoin ecosystem is further complicated, while underground trading will presumably persist.

Conclusion

• China is expanding its crypto ban for the first time explicitly to companies operating abroad that are controlled by Chinese actors—an extraterritorial dimension intended to prevent geographic circumvention strategies

• Yuan-based stablecoins and tokenized assets are the focus of the tightening, underscoring China's intention to prevent any currency digitization outside the state e-CNY

• The timing during the market correction could indicate that Chinese investors remain actively engaged in the crypto market despite existing bans—otherwise the tightening would be superfluous

• For the Bitcoin network itself, the impact is marginal, as China already exited mining in 2021—decentralization and geographic diversification have proven to be effective protection

• The development illustrates the fundamental regulatory dichotomy: while Western nations are increasingly creating frameworks for controlled integration, China is pursuing complete exclusion of decentralized currencies in favor of total state control