Background
China has repeatedly banned cryptocurrency trading and mining (notably in 2017 and 2021), yet a large underground market persists . Mainland investors — spooked by domestic stock and property slumps — have quietly routed capital into Bitcoin and other tokens using workarounds that skirt official rules . These include using VPNs to access foreign exchanges, swapping yuan for stablecoins via Chinese fintech apps, and shifting funds offshore under the guise of education or travel. Despite the ban, the Chinese crypto market saw an estimated $86.4 billion in on-chain transactions (July 2022–June 2023) , driven mainly by retail and OTC trades. This surge has made China one of the world’s largest hidden crypto markets, even as authorities tighten enforcement.
Acquisition Methods
Chinese buyers employ a variety of covert methods to acquire Bitcoin:
- Peer-to-Peer (P2P) Trading & OTC Desks: Individuals use P2P platforms on international exchanges (e.g. Binance, OKX) by selecting Hong Kong or foreign regions, and use bank transfers, WeChat Pay or Alipay to pay sellers in yuan . Offline OTC shops in Hong Kong (and some Chinese border cities) also cater to mainlanders. For example, Crypto HK in Hong Kong allows any customer to purchase crypto with as little as HK$500 (~US$64) and no ID required (image below). Daily OTC volumes in these shops can reach millions of yuan , reflecting sustained private demand.
Image: A Hong Kong “Crypto HK” OTC shop. Such lightly-regulated stores let mainland buyers covertly convert yuan to Bitcoin (no ID checks) .
- Fintech/Stablecoin Pipelines: Traders convert RMB to dollar-pegged stablecoins via Chinese apps. For instance, exchanges like OKX and Binance guide users to use Ant Group’s Alipay or Tencent’s WeChat Pay to buy USDT or other stablecoins through local dealers . Those stablecoins are then transferred to overseas crypto accounts to buy Bitcoin. This bypasses banks’ monitoring, since transfers within apps appear as normal payments. Chinese exporters also increasingly use USDT for foreign trade, illustrating how stablecoins move money out of yuan’s purview .
- Small-Bank Accounts & Smurfing: Retail investors open accounts at small, rural Chinese banks (with laxer oversight) to fund trades. One Shanghai executive described using rural-bank debit cards, splitting purchases into ~¥50,000 (≈US$7,000) chunks to avoid reporting thresholds . These transactions are routed through grey-market dealers who exchange the yuan for crypto. By staying under regulators’ radar and using multiple cards/accounts, individuals accumulate Bitcoin stealthily.
- Overseas Accounts & Travel Quotas: Mainland buyers open bank accounts and trading accounts overseas. They use their personal $50,000 annual FX quota under the guise of education or travel to remit funds to Hong Kong crypto accounts . From Hong Kong they can legally trade Bitcoin (the SAR permits regulated crypto markets, e.g. spot ETFs) and then hold the crypto offshore or covertly repatriate it.
- VPNs and Foreign Exchanges: Many Chinese users install VPNs or use foreign app stores to download international crypto apps. Once connected to a Hong Kong VPN, apps like Binance or Bybit show Hong Kong markets and accept yuan P2P trades . In practice, tokens themselves are not illegal to hold in China, and such VPN-enabled trades exploit that gray area .
In sum, Chinese investors mix P2P OTC trades, fintech-enabled stablecoin swaps, and offshore accounts to buy Bitcoin beneath the regulatory radar .
Participants (Private vs. Corporate vs. State)
Available evidence suggests these crypto purchases are driven largely by private individuals and institutions, with emerging corporate and even state-linked interest:
- Private Retail Investors and Wealthy Individuals: The bulk of covert buying appears to come from ordinary citizens, traders and wealthy individuals seeking alternatives to sinking domestic assets . They often work through informal networks and OTC dealers. For example, in interviews one dealer noted “daily volumes run into several million yuan or even dozens of millions” from mainland clients . Chainalysis analysts also confirm much of China’s post-ban crypto volume consists of retail transactions (even high-end “whale” buys) via OTC and P2P channels . In practice, any private investor in China can acquire Bitcoin if willing to navigate these gray-market routes.
- Chinese Financial Firms and Tech Companies: Some Beijing-friendly corporations and financial institutions are quietly positioning for crypto. Dozens of Chinese brokerage and asset-management firms are eyeing Hong Kong’s crypto boom to pad growth . For instance, Hong Kong subsidiaries of state-affiliated groups like Bank of China and China Asset Management (ChinaAMC) have announced plans to explore crypto trading or funds in the SAR . Tech giants (JD.com, Ant Group) have even lobbied Chinese regulators to authorize yuan-denominated stablecoins in Hong Kong – a step aligned with broader crypto usage. In Hong Kong’s OTC space, founders report working with “investment banks, private equity firms, and high net worth individuals,” making crypto part of their portfolios . This shows China’s financial sector (though operating overseas) is also engaging with Bitcoin.
- State and State-Linked Entities: Direct evidence of mainland government or party organs secretly buying Bitcoin is lacking, but related activity exists. Notably, local Chinese governments have amassed Bitcoin through law enforcement seizures (e.g. funds confiscated from fraud/PoS schemes) and then sold it through private intermediaries to bolster budgets . By late 2024, cities reportedly held 15,000 BTC ($1.4 billion) from such seizures . Courts and experts are now debating whether these should be centrally managed or even held in a national “bitcoin reserve” rather than piecemeal sales. There are also speculative reports (unverified in major media) that top Chinese policymakers have discussed building strategic crypto reserves. For example, China’s deputy governor hinted at managing seized crypto or even a sovereign crypto fund . Additionally, some “state-backed entities” have quietly invested in Hong Kong’s crypto ecosystem under the radar . In short, while the private sector dominates illicit Bitcoin purchases, government-related players are handling seized crypto (and possibly weighing strategic holdings), and are softly signaling interest in blockchain via Hong Kong channels.
Scale, Volume and Timing
Blockchain-analysis firms provide hard data on the scope of China’s underground crypto market:
- Explosive Volume since 2022: Chainalysis reports that between July 2022 and June 2023 (post the 2021 ban), mainland-linked wallets received about $86.4 billion in crypto . This dwarfs other Asian markets (e.g. Hong Kong $64B) and reflects a major bounce from near-zero volumes in 2022. The peer-to-peer trading rank of China soared from 144th in 2022 to 13th globally in 2023 , showing how P2P deals exploded. Much of this was retail-sized trades ($10k–$1M), nearly double the global average, indicating a surge of Chinese individuals putting significant sums into crypto .
- Timing – Escalation in 2023: According to anecdotal sources, mainland buying accelerated around early 2023 as China’s economy and markets weakened. One Shanghai executive began covert crypto purchases in early 2023 when stock and property plummeted . Across 2023, foreign analysts noted a persistent “dash” by Chinese to move money offshore into crypto . Chainalysis data confirms that crypto activity “bounced” in this period even as global markets cooled . In short, clandestine Bitcoin buying was minimal right after the 2021 ban but surged in late 2022 and into 2023.
- Recent Crackdowns: China’s government has only intensified crypto restrictions. By May 2025 it criminalized personal cryptocurrency ownership altogether (even as courts still call crypto “property”) . Banks now monitor foreign-exchange and large transactions for crypto links. Despite this, industry insiders note that “underground crypto flows reached over $75 billion” in the year to mid-2024 , underscoring that the black market remained vast even under heavy pressure.
Evidence & Reporting
Our understanding of this secret market comes from blockchain analysis and investigative reporting:
- Blockchain Analytics: Firms like Chainalysis and SAFEIS track on-chain flows into/from China-related addresses. Chainalysis’ country breakdown attributes enormous P2P volumes and exchange inflows to mainland users . These analyses draw on data such as transaction patterns, OTC trade estimates, and web traffic to infer country-level activity. For example, Jamestown Foundation analysts cite Chainalysis to confirm the $86.4B number . Such firms also note rising crypto-related crime (e.g. Ponzi schemes and money-laundering using Bitcoin), which indirectly evidences high usage.
- Media Investigations: Reputable news agencies (Reuters, Bloomberg, SCMP) have interviewed Chinese investors, dealers and bankers to document methods. Reuters reporters spoke with Shanghai execs and HK exchange heads who describe using small bank cards, fintech apps, and cross-border quotas . They also visited OTC shops and online chats to confirm P2P services targeting mainlanders . Bloomberg and other outlets have similarly detailed how Chinese buy crypto via Macau, HK, or crypto services in Asian financial centers.
- Industry and Insider Accounts: Executives at crypto exchanges and OTC firms (often anonymously) admit to routinely serving mainland clients . For instance, a Hong Kong crypto-exchange senior executive noted “Almost everyday, we see mainland investors coming into this market” . Chainalysis’ Eastern Asia report even quotes OTC desk operators saying they work with Chinese investment banks and high-net-worth clients .
- Leaked or Public Documents: Although no public “smoking gun” government memo has surfaced, regulatory filings in Hong Kong hint at Chinese involvement. Several HK-licensed crypto funds have Chinese institutional backers. Chinese think-tank discussions (reported in crypto media) about yuan stablecoins or Bitcoin reserves suggest official interest, but these remain unconfirmed by mainstream sources.
Taken together, these on-chain statistics and field reports form a consistent picture: mainland China has a thriving, if hidden, market for Bitcoin. All credible analyses agree that despite strict bans, Chinese individuals and some institutions find creative ways to acquire crypto .
Summary Table
| Actors | Acquisition Methods | Approx. Scale / Notes | Sources / Evidence |
| Mainland Retail Traders | P2P/OTC trades via local bank transfers (often small rural banks); WeChat/Alipay → stablecoins → foreign exchanges; VPN access to HK/foreign crypto apps; using personal FX quotas to fund HK crypto accounts. | Aggregate on-chain volume ~$86B (Jul 2022–Jun 2023) ; thousands of daily deals (millions of yuan) at OTC desks . Individual buys typically <$50k each to evade limits . | Investigative reporting (Reuters) on bank-card and fintech methods ; Chainalysis data on volumes ; academic/industry analyses . |
| Chinese Banks/Finance Cos. | Opening HK subsidiaries or accounts for crypto; launching licensed crypto products (ETFs, stablecoins) in HK; exploratory trades via OTC. | Growing interest (no public volume); several SOE-backed fund applications filed in 2024. (Banks-of-China HK, ChinaAMC HK exploring crypto businesses ). | News reports (Reuters) on bank/asset-manager moves ; Chainalysis interviews indicating investment-bank clients ; known HK crypto-ETFs by ChinaAMC, etc. |
| Local Governments / State | Handling of seized crypto: selling confiscated Bitcoin via private agents; discussing creation of official Bitcoin reserves. Possibly sponsoring domestic blockchain/stablecoin initiatives. | Cities held 15,000 BTC ($1.4B) end-2024 from crime busts . Private firms have sold billions of yuan worth of seized crypto overseas . Any “state buying” beyond this is speculative. | Reuters analysis of court and budget documents ; statements by officials about seized-asset policies. Reports of China eyeing crypto reserves (unverified rumors in crypto press). |
Sources: Authoritative media and research: Reuters investigations , blockchain analytics (Chainalysis, SAFEIS) , industry reports (Chainalysis blogs) , and expert commentary. Together these confirm that Chinese investors – through a mix of OTC dealers, fintech channels and offshore routes – are covertly buying Bitcoin at a very large scale despite Beijing’s prohibitions .