During a November 2 interview, former President Donald Trump asserted that “China is getting into it [crypto] very big right now,” framing the nation as a significant competitive threat in the digital asset space. This statement appears paradoxical, given Beijing’s comprehensive ban on cryptocurrency trading and mining implemented in 2021. However, the apparent disconnect isn't rooted in secret intelligence or an unnoticed policy reversal. Instead, it likely stems from a conflation of several distinct phenomena: Hong Kong's increasingly liberalized crypto market, Beijing's extensive central bank digital currency (CBDC) ambitions, and widespread gray market stablecoin activity.
The timing of Trump’s remarks is particularly salient. Just a day later, during Hong Kong FinTech Week, the region's Securities and Futures Commission (SFC) announced a relaxation of rules. This move allows licensed virtual asset platforms in Hong Kong to access global order books and liquidity pools, deepening its integration with international crypto markets while the mainland maintains its prohibition. Trump’s statement, whether intentional or not, captures a complex reality: “China” operates across multiple crypto fronts simultaneously, just not the ones most people assume.
Mainland China's Operational Crypto Ban Remains Intact
On September 24, 2021, the People's Bank of China unequivocally declared all cryptocurrency transactions illegal, effectively targeting peer-to-peer trading and mining operations. This ban prohibited domestic exchanges, criminalized facilitation services, and blocked foreign platforms from serving mainland users. As of now, there has been no reported reversal of this stringent framework by any major outlet or legal tracker. The ban successfully achieved its immediate objectives: driving exchanges offshore, collapsing domestic mining operations, and restricting retail access to speculative tokens.
However, the ban did not eliminate the underlying demand for crypto’s core functionalities: capital mobility, rapid cross-border settlements, and a distrust of traditional intermediaries. These forces simply found new avenues: relocation to Hong Kong’s licensed regime, migration to over-the-counter (OTC) stablecoin channels, or expression through Beijing’s own digital currency project.
Hong Kong: The Permissive Crypto Carve-Out
Hong Kong's approach to virtual assets stands in stark contrast to the mainland. In June 2023, the SFC launched a licensing framework for virtual asset trading platforms, granting retail access to approved tokens on compliant exchanges. By April 2024, Hong Kong had even approved spot Bitcoin and Ethereum ETFs, products previously unavailable on the mainland, providing institutional investors with a regulated on-ramp.
The November 3 announcement further extends this permissive stance. Licensed platforms can now connect to global liquidity sources, rather than being confined to isolated Hong Kong-only order books. This change eliminates a significant structural disadvantage, as Hong Kong’s domestic market alone cannot generate the depth or competitive spreads seen on global giants like Binance or Coinbase. Connecting to international liquidity transforms licensed Hong Kong platforms into viable alternatives for sophisticated traders seeking regulatory cover without compromising execution quality.
This is the mechanism that makes Trump’s framing coherent, even if technically imprecise. When he says “China,” he is likely bundling a Special Administrative Region with de facto policy autonomy into the same mental category as the mainland.
Hong Kong’s strategic moves – retail access, ETFs, and now global liquidity – create the appearance of “China” advancing significantly in crypto, even as Beijing’s domestic trading ban remains firmly in place.
The CBDC Layer: Digital Money, Not Decentralized Crypto
Beijing's e-CNY pilot represents the world's largest central bank digital currency deployment by transaction volume, with cumulative transactions exceeding ¥7 trillion by mid-2024. This state-backed digital currency spans retail payments, government disbursements, and corporate settlements. Notably, Hong Kong began accepting e-CNY at local merchants in May 2024, linking the mainland’s digital currency infrastructure to an international financial hub.
The e-CNY functions as programmable state money—centralized, surveilled, and designed to strengthen, rather than challenge, Beijing’s monetary control. It shares no philosophical DNA with decentralized cryptocurrencies like Bitcoin. Yet, its immense scale and cross-border extension into Hong Kong contribute to the perception that “China” is at the forefront of digital assets. Trump’s remarks conflate this state-issued digital money with permissionless crypto, but the confusion tracks a genuine reality: China commands the most advanced retail CBDC in production, bolstering its claim to leadership in digital finance despite its ban on decentralized alternatives.
Gray Market Stablecoin Adoption and Hashrate Resilience
Despite the official ban, enforcement gaps and strong economic incentives have fostered a parallel system. Chinese exporters are increasingly utilizing stablecoins like USDT for cross-border payments, bypassing slow traditional bank transfers and strict capital controls. This adoption, while not centrally coordinated, is widespread enough that Beijing cannot ignore it. Stablecoin flows have also surged in Russia-China trade channels as Western sanctions complicate traditional banking rails, making digital dollars a de facto settlement layer for transactions that the formal financial system struggles to process.
This extensive over-the-counter activity explains why the statement “China is big into crypto” resonates with traders and businesses, even when mainland retail trading remains prohibited. The distinction between prohibited speculative investment and tolerated commercial usage creates a space for stablecoins to function as essential infrastructure rather than speculative assets. Beijing has not legalized this activity but has also not aggressively stamped it out, maintaining a calculated ambiguity that allows cross-border commerce to continue while simultaneously studying how to channel these flows into manageable, state-controlled instruments.
Furthermore, China’s hashrate did not fall to zero after the 2021 mining crackdown. Cambridge’s mining map indicates ongoing activity, likely from operations relocated to remote provinces or hardware transferred abroad while maintaining Chinese ownership. More significantly, Chinese firms continue to dominate the manufacture of equipment that secures global cryptocurrency networks. Bitmain, the leading ASIC producer, operates out of Beijing and expands its manufacturing capacity globally, ensuring China remains deeply embedded in crypto infrastructure through its hardware supply chains, regardless of domestic mining activity.
Trump’s ‘China is Big into Crypto’: A Strategic Reality
Donald Trump’s statement likely doesn't signal a mainland policy reversal or undisclosed intelligence. Instead, it reflects a strategic reality far more complex than binary narratives allow. The remark “China is big into crypto” effectively collapses several distinct phenomena into a single observation:
- Hong Kong’s licensed market is now linked to global liquidity.
- Beijing’s extensive ¥7 trillion CBDC program (e-CNY) is expanding and extending into Hong Kong.
- Chinese exporters are settling trade in USDT, circumventing capital controls.
- Chinese hardware manufacturers continue to supply the vast majority of global mining infrastructure.
The Hong Kong liquidity announcement is particularly significant because it expands the legal channels through which Chinese capital can access crypto markets. Licensed platforms connecting to global order books provide mainland investors with offshore pathways that appear less like evasion and more like regulatory arbitrage. The perception that “China” competes in crypto intensifies not because Beijing lifted its ban, but because Hong Kong has built a compliant alternative that achieves similar market access through a distinct legal architecture.
Trump’s campaign often frames America's crypto leadership as a binary competition. His remarks treat China as a unitary actor, yet the reality involves intricate jurisdictional splits, state versus private initiatives, and retail bans coexisting with institutional access. Nevertheless, the core concern holds true: China maintains multiple positions in the crypto space despite its domestic prohibition. The competitive landscape Trump describes exists, but it doesn't take the form most assume. The mainland ban remains intact; the perceived “threat” originates from Hong Kong’s licensed alternative, Beijing’s CBDC infrastructure, and the widespread use of stablecoins by exporters, rather than from a sudden embrace of decentralized finance.
What Trump termed “getting into it very big” is less a policy shift and more a recognition that “China” has found multifaceted ways to participate in and influence global crypto markets without legalizing the activity its regulators fear most: uncontrolled retail speculation in permissionless assets.
Source: CryptoSlate
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