Despite countless Western media outlets describing China’s crypto “ban,” crypto trade is very much alive on mainland China. In just one month last year, Binance reportedly did $90 billion in Chinese crypto trade, making China the largest market for the world’s largest exchange.
How is this possible? It’s tempting to turn this into a story about the power of decentralized money to elude government control, and there is certainly some truth in that. But that’s only part of the story. Crypto hasn’t disappeared in China because crypto isn’t completely banned there.
This is very different from the impression you’d get from Western media outlets, which commonly refer to China’s crypto ban or its ban of crypto trade. There are too many examples to list here – just do a basic search of those terms to see what I mean. Yet when I asked several Chinese industry insiders if they thought it was accurate to say that crypto is banned in China, the answer was overwhelmingly no. Their general understanding was that it’s not illegal for individuals to hold or trade crypto, but their activities would not be protected by law.
This interpretation isn’t limited to informal conversations. An article written by authors from a court in Fujian province notes that “administrative laws and policies do not completely prohibit virtual currency transactions.” A Chinese law firm published a detailed post on the topic that says, “currently, our country has no laws or administrative regulations prohibiting Bitcoin trading activities.”
Reading between the lines
It’s not hard to understand why many assume that crypto is fully banned in China. Chinese authorities have clearly cracked down on the crypto industry, and there are many crypto-related activities that are indeed not allowed.
But in China, what is not said often takes on a special importance. People tend to pay attention to what is not explicitly restricted. Then they find room to maneuver in those relatively blank spaces.
In China, you need to look not just at what the rules say, but at how people interpret them
So let’s just take a moment to go through some of the more well-known crypto crackdowns and what they actually said. In 2013, China restricted financial and payment institutions’ involvement with Bitcoin. In 2017…