Crypto Taxation in China: Why It Doesn't Exist Under Current Law

There is no such thing as crypto taxation in China - not because the government ignores it, but because crypto itself is illegal. If you're looking for how to report Bitcoin gains or pay taxes on Ethereum staking rewards in China, you won't find a form, a rule, or even a guideline. That’s because the Chinese government doesn’t treat cryptocurrency as an asset to be taxed. It treats it as a crime to be erased.

China Doesn’t Tax Crypto - It Banned It

Most countries tax cryptocurrency like property or income. The U.S., Canada, Germany, Japan - they all have clear rules: sell Bitcoin for profit? Pay capital gains. Mine Ethereum? Report it as income. Trade tokens? Keep records. China does none of that. Why? Because since June 1, 2025, owning, trading, or mining cryptocurrency in China is illegal under a sweeping ban enforced by the People’s Bank of China (PBOC).

This isn’t a recent shift. It’s the final step in a 16-year campaign to remove crypto from China’s financial system. Back in 2009, the government first warned against using virtual currencies to buy real goods. By 2013, banks were barred from handling Bitcoin. In 2017, ICOs were shut down. In 2021, mining operations were forcibly closed across provinces like Inner Mongolia and Sichuan. By 2025, even holding crypto privately became legally unprotected - no contracts, no recourse, no rights.

The May 30, 2025 decree made it official: any transaction involving Bitcoin, Ethereum, or any other digital token is now classified as an illegal financial activity. Not a taxable one. Not a gray-area one. Illegal. Period.

What Happens If You Own Crypto in China?

Technically, the law doesn’t say “it’s illegal to hold crypto.” But that’s not the same as being safe. If you have Bitcoin in a wallet, the state won’t protect you. If your exchange account gets frozen - which happens often - you can’t sue. If someone hacks your wallet? No police report will help. If you try to cash out through a peer-to-peer deal? You risk criminal charges for “illegal fundraising” or “financial fraud.”

Authorities don’t just shut down exchanges. They seize assets. In 2024, over 12,000 crypto wallets were frozen by Chinese courts. In 2025, the PBOC started using AI tools to track cross-border crypto flows. If you’re caught sending crypto to an overseas wallet, your bank account could be locked, your passport flagged, or worse - you could face criminal prosecution.

Foreigners aren’t exempt. Tourists, expats, students - if you’re physically in China, you’re bound by the same rules. A Canadian citizen trading Solana on a local app in Shanghai could be fined, deported, or detained. No one is above the ban.

Why Did China Go So Far?

China’s move wasn’t about fear of technology. It was about control. The government saw crypto as a threat to two things: monetary sovereignty and financial stability.

First, decentralized money undermines the state’s ability to track spending, control inflation, and direct capital. Bitcoin doesn’t answer to Beijing. The digital yuan does. That’s why China spent over a decade building its own central bank digital currency (CBDC) - the digital yuan - which allows full surveillance of every transaction, down to the second.

Second, crypto speculation was destabilizing households. In 2021, reports showed millions of Chinese citizens were borrowing money to buy crypto. When prices crashed, defaults spiked. The government didn’t want another wave of personal debt or bank failures tied to volatile tokens.

So instead of regulating, they eradicated. No tax forms. No reporting. No loopholes. Just silence.

How This Compares to the Rest of the World

Globally, 50+ countries have tax frameworks for crypto. Taiwan taxes trading at 5% VAT. The U.S. taxes gains up to 37%. The UK requires detailed records. Even Singapore, known for being crypto-friendly, requires income reporting for mining and staking.

China is the only major economy that doesn’t just ignore crypto taxes - it criminalizes the entire activity. No other country has gone this far. Not Russia. Not India. Not even North Korea, which mines crypto for sanctions evasion.

This makes China an outlier. It’s not just different - it’s the opposite of every other approach.

What About Mining?

Crypto mining was once huge in China. In 2020, over 70% of Bitcoin mining happened here. But the government saw it as a waste of electricity. In 2021, they shut down entire mining farms in Sichuan and Xinjiang. By 2025, any device connected to a power grid that’s used for mining - even a single GPU in a home - can be seized.

The penalties are severe. In 2024, a man in Inner Mongolia was fined 200,000 RMB ($27,000) and sentenced to 18 months in prison for running a small mining rig in his garage. His equipment was destroyed. His bank accounts frozen. His name added to a national financial blacklist.

There are no “small-time” miners anymore. The state doesn’t distinguish between hobbyists and corporations. All are treated the same: illegal.

Is There Any Hope for Change?

In July 2025, officials in Shanghai held a closed-door meeting to discuss digital assets - including stablecoins and tokenized securities. Some experts believe this signals a possible softening. Maybe China will allow regulated, state-approved digital assets in the future - but only if they’re controlled by the government.

Don’t expect crypto taxation to return. Even if rules change, the goal won’t be to tax it - it’ll be to replace it. The digital yuan is China’s answer. It’s not an alternative to Bitcoin. It’s the only digital money China will ever permit.

What Should You Do If You’re in China?

If you’re living in China and you own crypto, here’s the reality:

• Do not trade, sell, or transfer crypto - even privately.
• Do not use Chinese banks or payment apps to interact with crypto wallets.
• Do not mine or run nodes on any device connected to Chinese power or internet.
• Do not tell anyone you hold crypto - not even family.

The safest move is to move your assets out before entering China - or leave them behind entirely. Once you’re inside the country, there’s no legal way to access or liquidate them. Any attempt will trigger automated monitoring systems.

If you’re a business owner, don’t even think about accepting crypto as payment. It’s not just risky - it’s a criminal offense.

Final Reality Check

Crypto taxation in China isn’t a tax problem. It’s a survival problem. You don’t need to file a form. You need to avoid detection.

The government doesn’t want you to pay taxes on crypto. They want you to forget it ever existed.

And right now, they’re winning.