Chinese courts: Personal holding and trading of cryptocurrencies are generally not recognized as illegal business activities.

In China, the status of cryptocurrencies has always been shrouded in a layer of fog. Since multiple ministries jointly issued the “Notice on Further Preventing and Disposing of Risks of Virtual Currency Trading and Speculation” in 2021, which classified related activities as “illegal financial activities,” the official strict regulatory stance seems to have been settled. However, beneath the policy’s high walls, a countercurrent woven from technological enthusiasm, speculative demand, and community culture has never truly ceased.

Recently, a specialized seminar held by the Shanghai People’s Court appears to have delineated a clearer legal boundary for individual cryptocurrency activities. Meanwhile, on China’s largest second-hand trading platform “Xianyu,” a vibrant underground crypto “market” is thriving. These two aspects—one an analysis of legal principles from the halls of power, the other a vivid portrayal of grassroots life—together form a far more complex and authentic picture of China’s current cryptocurrency landscape than a simple “one-size-fits-all” ban. So, what does holding and trading cryptocurrencies in China really mean today?

Legal Calibration

For a long time, the most pressing concern for ordinary investors has been: “Will my personal buying and selling of cryptocurrencies be considered a crime?” The conclusions from the Shanghai court seminar largely address this widespread anxiety.

A key judicial tendency conveyed is: if an individual’s mere holding, trading, or arbitrage activities do not involve providing services to others, operating long-term businesses, or charging fees—i.e., lack the “business-like” and “profit-making” characteristics—such activities generally should not be deemed as “illegal business operations.”

This interpretation is crucial. It distinguishes personal speculation or investment from organized, purpose-driven commercial activities. For example, buying and selling artworks for profit as an art enthusiast is different from running a gallery that provides trading platforms and charges commissions—these are two distinct legal concepts. The former involves personal asset disposal; the latter steps into the realm of commercial enterprise. Therefore, for most ordinary players who only buy and sell on secondary markets, this provides a certain legal certainty, alleviating their worries about simple personal transactions.

However, this does not mean regulatory looseness. The court also drew two insurmountable criminal red lines, crossing which would lead to very different consequences.

The first red line is “money laundering.” The seminar clarified that establishing the crime of money laundering hinges on whether the perpetrator subjectively “knew” that the funds involved were criminal proceeds. While authorities cannot convict solely based on abnormal transaction features like high premiums or rapid frequency, such features are still important indicators for inferring “subjective knowledge.” More importantly, transferring assets via cryptocurrencies from the moment of converting criminal proceeds into virtual assets already constitutes money laundering, and it is not necessary to wait until converting back into fiat currency to consider the crime complete.

The second, and perhaps most easily unintentionally crossed red line for ordinary users, is “vague foreign exchange trading.” Currently, due to restrictions on fiat currency inflows and outflows, many people assist others in currency exchange through a path like “RMB → Cryptocurrency → Foreign Currency.” If, during this process, you knowingly serve the other party’s purpose and charge a fee, such behavior is highly likely to be deemed “vague foreign exchange trading.” If the circumstances are serious, it could constitute illegal business operations. This boundary warns all cryptocurrency participants that personal arbitrage activities are fundamentally different from acting as a “coin dealer” in an underground money exchange.

Overall, this judicial discussion is not a signal of policy shift but a refined “calibration” within the existing high-pressure framework. It attempts to find a more operational balance between cracking down on crimes involving cryptocurrencies and protecting individuals’ property disposal rights, thereby enhancing the predictability of legal application.

The Cryptocurrency World

While legal provisions strive to define boundaries, grassroots creativity has long found its way in the gray areas. Open “Xianyu,” search for a few keywords, and a bizarre yet lively crypto universe springs to life, vividly illustrating what “policies above, countermeasures below” look like.

First, you see creative merchandise from major exchanges. From Binance-branded Feitian Maotai, OKX’s atmospheric Mid-Autumn Moon Lantern, to Bitget’s Messi collaboration football—items that should serve as brand PR gifts are now openly circulated on Xianyu, becoming a unique community identity marker. Their existence proves that even if exchange websites and apps are inaccessible domestically, their brand influence and cultural penetration remain resilient. The buying and selling of these peripherals are not just exchanges of goods but also a form of cultural recognition and communication within the community.

More interestingly, there are products called “Lotto Miners.” These small, low-power independent Bitcoin mining devices have such low hash rates that the chance of mining a block is dozens of times lower than winning a lottery jackpot. Yet, both sellers and buyers are well aware that this is more than just an economic transaction. Owning a “Lotto Miner” means participating in Bitcoin network maintenance at minimal cost, carrying a spiritual value of “charging for faith” and a faint hope of hitting the jackpot. Despite the slim chances, occasional news of “lottery wins” worldwide keeps fueling this hope.

The hot-selling Solana phones vividly demonstrate the determination and ingenuity of Chinese players. From the first-generation Saga phone, whose value skyrocketed due to the included BONK airdrop, to the second-generation Seeker phone, which anticipates future airdrops, this “golden shovel” has always kept the market on edge. However, for Chinese users, obtaining it involves a global “tug-of-war.” Phones produced in Shenzhen must be shipped overseas first, then forwarded back to China by agents. Once received, if users don’t know how to configure it or even set up Wi-Fi, they face additional hurdles. This complex supply chain vividly depicts the resilience of Chinese crypto enthusiasts, who spend enormous time and money to access the global mainstream ecosystem.

Dual Existence

Placing the judicial analysis from Shanghai alongside the vibrant market scene on Xianyu reveals a contradictory yet harmonious picture. On one hand, the national regulatory red lines are becoming clearer, with strict crackdowns on crimes like money laundering, illegal fundraising, and cross-border remittances, and the law’s deterrent effect remains strong. On the other hand, personal, non-commercial crypto holdings and speculative activities have gained some breathing room in judicial practice.

This reflects a pragmatic approach to governance: completely eradicating a decentralized, global market is nearly impossible. Instead of total blockade, it is better to draw clear bottom lines and focus enforcement on crimes that truly threaten financial order and social safety.

The lively crypto subculture on Xianyu demonstrates the strong market demand and community resilience. As long as the crypto world continues to offer opportunities for wealth creation and technological innovation, countless passionate and intelligent individuals will find ways to bypass barriers and participate.

Therefore, China’s cryptocurrency story is likely to continue evolving within this dual structure of “strict official regulation” and “grassroots flexibility” in the foreseeable future. The boundary markers of law and the underground currents of the market will jointly shape this unique and complex crypto landscape.