Regulation of Cryptocurrency and Initial Coin Offerings (ICOs) in People’s Republic of China (PRC)

People’s Republic of China (PRC)


The People’s Bank of China (PBoC) and six other financial regulators in the PRC issued a circular on 4 September 2017 banning ICOs in the PRC. From the date of the circular, all ICOs were required to cease immediately and money already raised through ICOs had to be refunded to investors. The circular declared ICOs to be an unauthorized illegal fundraising activity. The circular states that cryptocurrencies issued in ICOs are not issued by China’s monetary authorities, do not have legal status equivalent to that of fiat currencies and should not be used and circulated in the market as currencies.

Crypto Exchanges

Trading platforms are prohibited from engaging in the exchange of fiat currency and cryptocurrency; buying or selling cryptocurrencies; setting cryptocurrency prices and providing information and intermediary services in relation to cryptocurrencies. This prohibits the operations of cryptocurrency trading exchanges. China has also taken steps to block online access to offshore ICOs and crypto exchanges.

Financial institutions and non-banking payment institutions are prohibited from, directly or indirectly, providing services or products relating to ICOs, such as setting up bank accounts, or providing registration, trading, settlement, clearing or insurance. A ban on banks and payment institutions dealing in Bitcoin has been in effect since 2013.

There has been no official justification for China’s crackdown on cryptocurrencies, although the move is in line with the Central Government’s efforts to reduce financial market risks, as well as attempts to stem outflows of money from China. Fraud appears to have been a key concern – the PBoC noted in its September 2017 circular that 90% of ICOs launched in China were fraudulent. The effect of the clampdown has been to drive up costs as mining companies which originally moved to China to take advantage of cheap electricity and labour, are now relocating to the US and Canada [1].

Despite the clamp-down on ICOs, there were reports in October 2017 [2] that China was considering issuing its own sovereign cryptocurrency.

Note: The above represents Charltons’ current understanding of the regulation of ICOs in different jurisdictions. Charltons advises only on Hong Kong law and while the above represents our understanding of the legal position in certain other jurisdictions, legal advice from qualified lawyers in the relevant jurisdictions should be sought in relation to any particular transaction or situation. Further, this note is intended for educational purposes and it does not constitute Hong Kong legal advice. Specific advice must be sought in relation to any particular situation. 

August 2018


  1. Bloomberg. “How China’s Stifling Bitcoin and Cryptocurrencies: QuickTake Q&A”. 9 January 2018. <>.
  2. China Daily. “PBOC inches closer to digital currency”. 14 October 2017. <>

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