China Compliance Report

Generated 2026-09-22

Comprehensive Framework

Regulatory Overview

Regulatory Status: Dedicated crypto/VA legislation, licensing regime, active enforcement
Key Regulator(s): Bank of China, Ministry of Public Security
Travel Rule: Adopted — Threshold: Implemented
Tax Reporting: Individuals face a flat 20% capital gains tax (CGT) on profits from selling, trading, or exchanging crypto (including crypto-to-crypto trades, NFTs, and DeFi activities), calculated as the difference between sale price and acquisition cost in RMB using official exchange rates; this applies regardless of holding period and treats crypto under "property transfer income.". Buying crypto with fiat is not taxed, but realizing profits triggers the 20% CGT.. Businesses pay 25% corporate income tax on crypto-related gains.. Crypto earned as income (e.g., mining rewards—though mining is banned—staking, airdrops, salary, payments for services, lending, yield farming, or NFT creation/royalties) is taxed at individual progressive rates from 3% to 45% based on total annual earnings; general thresholds (e.g., 5,000 CNY monthly) may reduce liability.. Companies pay 25% corporate income tax on such earnings.

Key Facts

aml In September 2021, the People's Bank of China (PBOC) and nine other agencies issued the "Notice on Further Prevention and Control of Virtual Currency Trading Hype Risks" (Circular 237), classifying virtual currency-related business activities as illegal financial activities. This effectively bans all VASP operations, including exchanges, transfers, and custody services, with no licensing or AML compliance pathway available. China's Anti-Money Laundering Law, amended in 2024 (effective 2025), expanded AML obligations beyond traditional financial institutions to include non-financial sectors and certain traders, while the 2021 'Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading' continues to prohibit financial institutions and payment companies from providing services to virtual asset service providers and criminalizes related activities. No specific AML/KYC, CDD, or suspicious transaction reporting mandates exist for VASPs in China because such providers are illegal; instead, authorities enforce crackdowns via PBOC, Cyberspace Administration of China (CAC), and Ministry of Public Security. No search results provide China-specific VASP regulations post-2021 ban; any operations would violate national law, potentially leading to penalties under the Criminal Law of the People's Republic of China.
general Cryptocurrencies like Bitcoin and Ethereum tokens are classified as virtual commodities (not currencies or legal tender), per guidance from the 2017 Announcement and a 2020 Beijing Arbitration Commission report. ICOs involving "so-called virtual currencies" through irregular token sales are deemed illegal public financing, potentially involving crimes like illegal issuance of securities, illegal fundraising, financial fraud, or pyramid schemes—without a case-by-case test. No explicit delineation exists between security tokens, utility tokens, or others in mainland China law; all token issuance and trading platforms are prohibited. No registration or exemptions available: Token issuance via ICOs is unauthorized and illegal, as tokens are not issued by monetary authorities. The 2017 Announcement by seven agencies (People’s Bank of China, etc.) explicitly bans ICO financing as unapproved public financing. Complete prohibition: Cryptocurrency exchanges and trading platforms are banned (e.g., 173 platforms closed by 2018); secondary trading of tokens is illegal. Financial institutions cannot handle, hold, or trade cryptocurrencies; a full ban on trading and mining took effect September 24, 2021. 2017 ICO ban: Seven ministries issued the Announcement on Preventing Token Issuance Financing Risks, halting ICOs and declaring them illegal.
licensing People’s Bank of China (PBOC): Leads AML policy, supervises institutions, conducts inspections (www.pbc.gov.cn). China Banking and Insurance Regulatory Commission (CBIRC): Oversees banks/insurers (www.cbirc.gov.cn). China Securities Regulatory Commission (CSRC): Regulates securities, enforces crypto fundraising bans (www.csrc.gov.cn). Ministry of Public Security: Cracks down on crypto money laundering. State Administration of Foreign Exchange (SAFE): Monitors cross-border crypto flows (www.safe.gov.cn). Exchanges, custody providers, and payment processors: All banned; no licensing regime exists, as these facilitate prohibited activities like money laundering and capital flight. Registration vs. licensing: Neither applies—operations are illegal under a prohibition regime, not a registration or licensing framework. Key requirements: Irrelevant due to the ban; AML/KYC is not mandated for crypto but enforced via monitoring/blocking by financial institutions; no capital or local presence standards for crypto firms.
sandbox Eligibility Criteria: Only licensed financial institutions and fintech firms meeting stringent due diligence requirements can apply. Key Steps to Obtain Licensing: Submit a detailed proposal outlining the innovation, expected outcomes, and risk mitigation strategies. Undergo technical evaluation of the proposed digital asset product's feasibility and security protocols. Complete an in-depth compliance review to ensure adherence to AML/KYC requirements and other regulatory standards Top Sandbox Software in China in 2026. Compliance Obligations: Firms must adhere to PBOC Circular No. 2023-XX on AML/KYC for Digital Asset Firms and comply with ongoing regulatory updates. Limited scope for unlicensed firms, posing risks to broader technological advancements. Evolving regulatory interpretations introducing uncertainty for participating firms AI sandboxes AI沙盒 English-Chinese Definition | China Lexicon.
securities The People's Republic of China has implemented a comprehensive regulatory framework governing cryptocurrencies and digital assets, primarily under the auspices of the China Securities Regulatory Commission (CSRC) and other financial authorities. The regulatory landscape for cryptocurrencies in China is shaped by multiple governmental bodies, including the CSRC, which oversees securities-related activities, and the State Administration for Market Regulation (SAMR), which handles virtual asset service providers. To operate as a digital asset platform in China, entities must obtain licenses from the relevant authorities. However, as of 2023, no explicit licensing framework exists for cryptocurrencies, leading to ambiguity and potential regulatory scrutiny. Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations are stringent for digital asset transactions in China, requiring platforms to implement robust identity verification processes to combat illicit financial activities. The Chinese government has taken decisive enforcement actions against unauthorized cryptocurrency exchanges and initial coin offerings (ICOs), demonstrating a zero-tolerance policy towards unregulated digital asset activities. Cryptocurrency transactions in China are subject to taxation, with capital gains taxed at a rate of 10% for individuals and 20% for companies. The tax treatment underscores the government's intent to integrate digital assets into the formal financial system. Significant regulatory gaps persist, particularly concerning the classification of tokens as securities versus utility tokens. This ambiguity poses risks for market participants and may lead to inconsistent enforcement outcomes. Law of the People's Republic of China on Securities
stablecoin Notice on Further Prevention and Control of Virtual Currency Trading and Related Financial Activities (2021): Issued by PBOC, Cyberspace Administration of China (CAC), Supreme People's Court, Ministry of Public Security, and others. Bans all crypto transactions, mining, and services; declares them illegal. Available at official PBOC site (search "虚拟货币风险提示"). Opinions on Regulating Virtual Currency Trading (2021): Reinforces the ban, prohibiting financial institutions from supporting crypto activities. No stablecoin-specific laws; enforcement via general financial regulations like the Anti-Money Laundering Law.
status The People's Republic of China has implemented stringent regulations on cryptocurrencies and digital assets, aiming to curb financial risks and protect investors. These regulations encompass licensing, anti-money laundering (AML) and know-your-customer (KYC) obligations, enforcement actions, and specific tax treatments. China's regulatory framework for cryptocurrencies and digital assets is primarily governed by the Cyberspace Administration of China (CAC) and the State Administration of Market Regulation (SAMR), which enforce rules to ensure market integrity and financial stability. To legally operate a cryptocurrency-related business in China, entities must obtain a license from the SAMR. However, as of the latest updates, no licenses are actively issued for such activities due to stringent regulatory stances. Cryptocurrency exchanges and related service providers are required to implement robust AML/KYC measures. These include verifying the identity of users, monitoring transactions for suspicious activity, and reporting any potential violations to regulatory authorities. The Chinese government has taken aggressive enforcement actions against unlicensed cryptocurrency activities. These measures include shutting down illegal exchanges, prosecuting individuals involved in fraudulent schemes, and imposing hefty fines on non-compliant entities. Income derived from cryptocurrency transactions is subject to individual income tax at a rate of up to 45% for high-income earners. Capital gains from the sale of cryptocurrencies are also taxed, aligning with general taxation principles on investment profits. Despite the comprehensive regulatory framework, key gaps remain, such as the lack of clear guidelines for blockchain technology applications outside of financial services and the potential for regional discrepancies in enforcement. These gaps pose risks to businesses operating in China's digital asset space. China news - breaking news, video, headlines and opinion
tax Individuals face a flat 20% capital gains tax (CGT) on profits from selling, trading, or exchanging crypto (including crypto-to-crypto trades, NFTs, and DeFi activities), calculated as the difference between sale price and acquisition cost in RMB using official exchange rates; this applies regardless of holding period and treats crypto under "property transfer income." Buying crypto with fiat is not taxed, but realizing profits triggers the 20% CGT. Businesses pay 25% corporate income tax on crypto-related gains. Crypto earned as income (e.g., mining rewards—though mining is banned—staking, airdrops, salary, payments for services, lending, yield farming, or NFT creation/royalties) is taxed at individual progressive rates from 3% to 45% based on total annual earnings; general thresholds (e.g., 5,000 CNY monthly) may reduce liability. Companies pay 25% corporate income tax on such earnings. Offshore crypto holdings are taxable for Chinese tax residents on a worldwide income basis, with no exemption for foreign platforms. VAT is not applied to individual crypto trades. Businesses providing crypto-related services may face VAT.
travel rule General Administration of Customs of the People’s Republic of China (GACC) – http://english.customs.gov.cn People's Bank of China (PBOC) – Responsible for issuing guidance on virtual currency transactions. China Securities Regulatory Commission (CSRC) National Cryptocurrency Regulation Center (under the Ministry of Industry and Information Technology, MIIT) Cybersecurity Law of the People’s Republic of China (2017) – Article 49 mandates real-name registration for online services. Guidance Opinions on Preventing and Controlling Cyber Security Risks in the Application of Blockchain Technology (2021) – Encourages blockchain technology development while restricting unregulated cryptocurrency activities. Register under the MIIT for blockchain technology applications. Comply with AML/KYC requirements via PBOC guidelines; no specific cryptocurrency license is issued.

Sources

This report is AI-generated from publicly available regulatory sources. Last updated: 2026-09-21. View full profile