International Call for Collaborative Surveillance of Cryptocurrency Transactions
In the evolving world of cryptocurrencies, two major economies – China and Hong Kong – are taking distinct approaches to regulating this digital asset class.
China's Cryptocurrency Crackdown
China maintains a strict ban on cryptocurrency activities within its borders, including mining, trading, and financial institution involvement. This prohibition, enforced since 2021, allows individuals to own cryptocurrencies without engaging in banned activities. However, financial institutions like HSBC and Standard Chartered Bank must comply with China's regulatory prohibitions on crypto transactions.
China's stance is rooted in a zero-tolerance approach to crypto laundering. Strict anti-money laundering rules are enforced, with Chinese courts ruling that knowingly facilitating crypto transactions involving illicit funds is punishable by imprisonment and fines. This environment restricts banks' involvement with crypto assets domestically.
Promoting Blockchain, Not Cryptocurrencies
Despite the ban on cryptocurrencies, China supports blockchain technology as a strategic priority. Major financial institutions may participate in government-approved blockchain projects, aligning with the Chinese government's push towards a centralized and permissioned blockchain ecosystem.
Hong Kong's Liberal Regulatory Approach
In contrast, Hong Kong, a Special Administrative Region, has taken a more liberal regulatory approach. In mid-2025, it passed a Stablecoins Bill, permitting licensed entities to issue fiat-backed stablecoins. However, these stablecoins are not expected to circulate freely on the Chinese mainland due to capital controls and the Chinese government’s stance on decentralized crypto. Any yuan-pegged stablecoin would likely be integrated with China’s digital yuan CBDC rather than exist as a separate private stablecoin.
HSBC and Standard Chartered, operating in this environment, are not believed to engage in cryptocurrency business on the Chinese mainland given these bans. They may, however, participate in digital currency initiatives aligned with the Chinese government's policies, such as the e-CNY and regulated blockchain applications.
Global Perspective
The report highlights potential risks that cryptocurrencies may pose in certain economies as their use in payments and retail investments expands. It identifies international coordination on cross-border monitoring of crypto assets as a key priority. As of now, 51 jurisdictions worldwide have imposed bans or restrictions on cryptocurrency use.
In conclusion, despite the global presence of major banks like HSBC and Standard Chartered, their involvement with cryptocurrency within China is tightly restricted by law. They primarily focus on government-sanctioned digital currency initiatives and compliance with regulations rather than open crypto markets. The People's Bank of China's regulatory framework for cryptocurrencies is expected to be enhanced to align with recommendations from the Financial Stability Board.
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