President Donald Trump said on 60 Minutes on November 2 that China poses a competitive threat in the cryptocurrency space, warning that “China is very heavily involved in cryptocurrencies right now.”
This claim reveals a contradiction. Although the Chinese government banned cryptocurrency trading and mining in 2021, President Trump has positioned the country as the United States’ main rival in digital assets.
This disconnect is likely less about sensitive information or an unnoticed policy shift, and more likely due to the conflation of Hong Kong’s licensed market, the Chinese central bank’s digital currency ambitions, and the flow of gray market stablecoins into a single “China” narrative.
The timing is important because the Hong Kong Securities and Futures Commission announced during Hong Kong FinTech Week that it would relax rules the next day that would allow licensed virtual asset platforms to tap into global order books and liquidity pools.
The move will deepen Hong Kong’s integration with international crypto markets, while the mainland will maintain the ban.
President Trump’s statement, intentionally or not, captures the real dynamic. “China” is active on multiple crypto fronts simultaneously, but not in the ways most people assume.
Entry ban on mainland China remains in place
On September 24, 2021, the People’s Bank of China declared all virtual currency transactions illegal, including both peer-to-peer transactions and mining operations.
The ban bans domestic exchanges, criminalizes facilitation services and prevents foreign platforms from providing services to mainland users. As of this article, no major news outlets or legal trackers have reported the reversal of that framework.
The ban achieved its immediate goals of encouraging the offshoring of exchanges, disrupting domestic mining operations, and restricting retail access to speculative tokens.
The reasons why people wanted cryptocurrencies in the first place remained unresolved: capital liquidity, cross-border payment speed, and distrust of intermediaries.
Those forces have relocated to Hong Kong’s sanctioned regime, expanded into over-the-counter stablecoin channels, or found expression in the Chinese government’s own digital currency projects.
Hong Kong as a generous carve-out
Hong Kong’s regulatory approach is moving in the opposite direction. The SFC launched a licensing framework for virtual asset trading platforms in June 2023, allowing retail access to approved tokens on compliant exchanges.
By April 2024, Hong Kong had approved spot Bitcoin and Ethereum ETFs, a product previously unavailable on the mainland, providing a regulated means of entry for institutional investors.
The November 3rd announcement further expanded that tolerant stance. Licensed platforms can now link to global liquidity sources, rather than operating an isolated order book based only in Hong Kong.
This change eliminates the structural disadvantage that Hong Kong’s domestic market alone cannot generate the depth and spread to compete with Binance and Coinbase.
Connecting to international liquidity transforms licensed Hong Kong platforms into a viable alternative for sophisticated traders seeking regulatory coverage without compromising execution quality.
This is the mechanism that makes President Trump’s framework consistent, even if it is technically inaccurate. When he says “China,” he is probably lumping special administrative regions with de facto policy autonomy into the same mental category as the mainland.
The Hong Kong movement, retail access, ETFs, and now global liquidity are creating the impression that “China” is making headway in the crypto space, even as the Chinese government’s trading ban continues.
CBDC layer: digital money, not cryptocurrencies
Beijing’s e-CNY experiment represents the world’s largest central bank digital currency implementation by trading volume.
According to the report, the cumulative transaction value spanning retail payments, government spending, and corporate payments will exceed 7 trillion yen by mid-2024.
Hong Kong will begin accepting electronic renminbi in local merchants in May 2024, linking the mainland’s digital currency infrastructure to the international financial hub.
e-CNY will function as a programmable national currency, centralized and monitored, designed to enhance rather than challenge the Chinese government’s financial control.
It shares no philosophical DNA with Bitcoin or decentralized finance. However, its size and cross-border reach into Hong Kong has contributed to the perception that “China” is operating at the forefront of digital assets.
President Trump’s statements confuse this country’s digital money with unauthorized cryptocurrencies, but this confusion tracks with real reality. China is leading the way in producing the most advanced retail CBDCs, giving it credibility in claiming leadership in digital finance despite banning decentralized alternatives.
According to reports last year, Chinese regulators are exploring offshore renminbi-denominated stablecoins issued through Hong Kong with the aim of tapping into cross-border payment flows, currently dominated by dollar-pegged tokens.
The proposal would allow the Chinese government to maintain capital controls on the mainland while offering exporters compliant digital payment tools abroad.
Gray market stablecoin adoption and hashrate
Enforcement disparities and economic incentives created parallel systems. Chinese exporters are increasingly accepting USDT for cross-border payments, thereby avoiding time-consuming processes such as bank transfers and capital controls.
Although this adoption is not centrally regulated, it is too widespread for the Chinese government to ignore.
Trade channels between Russia and China have also seen an increase in stablecoin inflows, as Western sanctions complicate traditional banking rails and the digital dollar becomes a settlement layer for transactions difficult to process in formal financial systems.
This over-the-counter activity explains why the statement that “China is keen on cryptocurrencies” rings true for traders and businesses, even though retail trading on the mainland remains prohibited.
The distinction between prohibited speculation and permissible commercial use creates room for stablecoins to function as infrastructure rather than investment assets.
While the Chinese government has not legalized this activity, it has not eradicated it either, creating a calculated ambiguity that allows cross-border commerce to continue. At the same time, states are researching ways to channel those flows into manageable measures.
Furthermore, even after the mining crackdown in 2021, China’s hashrate did not fall to zero. The Cambridge mining map shows continued activity likely originating from operations that have maintained Chinese ownership but moved to remote states or moved hardware overseas.
More importantly, Chinese companies continue to manufacture equipment that secures global cryptocurrency networks.
Bitmain, a leading ASIC manufacturer, is based in Beijing and continues to expand its manufacturing capabilities in Southeast Asia and North America.
Even if there were no Bitcoin mining operations in China, the country would remain deeply embedded in its crypto infrastructure through its hardware supply chain.
President Trump Says “China is Enthusiastic about Cryptocurrency”: What That Probably Means
President Trump’s statements do not reflect a change in mainland policy or unreleased information. It reflects a more complex strategic reality than binary narratives allow.
The statement “China is paying a lot of attention to virtual currencies” collapses several different phenomena. Hong Kong’s licensed market is tied to global liquidity as the Chinese government’s more than 7 trillion yen CBDC program expands to Hong Kong.
Exporters are settling transactions in USDT despite capital controls, and Chinese hardware manufacturers are supplying the world’s mining infrastructure.
The Hong Kong liquidity announcement is significant as it expands the channels through which Chinese capital can legally access the crypto market.
Licensed platforms that connect to Binance and Kraken order books offer mainland investors an offshore route, but this seems more like regulatory arbitrage than avoidance.
The growing perception that “China” is competing in cryptocurrencies is not because the Chinese government has lifted its ban on cryptocurrencies, but because Hong Kong has created a compliant alternative that achieves similar market access through a different legal system.
Trump has campaigned on making America the crypto capital, framing the issue as a competition for dominance between the two parties.
Although his statements treat China as a single entity, the country actually includes divided jurisdiction, state-to-private initiatives, and retail bans that coexist with institutional access.
But the core concerns remain. That said, China maintains multiple positions in the cryptocurrency space despite domestic bans.
The competitive environment Trump describes exists, but not in the way many people assume.
The ban on the mainland remains in place. This threat does not come from China’s sudden introduction of decentralized finance, but from exporters leveraging Hong Kong’s licensed alternatives, Beijing’s CBDC infrastructure, and stablecoins.
What President Trump called a “huge commitment” is less a policy shift than an acknowledgment that China has found a way to participate in the cryptocurrency market without legalizing the thing regulators fear most: unchecked small-scale speculation in unauthorized assets.