China is making a remarkable move to step up legal research on Crypto while maintaining a comprehensive ban. A major conference recently held by the Beijing Intermediate People's Court brought together senior judicial authorities and academics to seek solutions to handle Crypto within the current legal framework.

Resolutely Banning but Still Controlling
Since 2021, China has banned Crypto trading and mining, considering them a risk to financial security. However, the People's Bank of China's December 2024 financial stability report continues to emphasize the need to control digital assets, while cooperating with international organizations to build a global legal framework.

However, the reality shows that the ban cannot completely eliminate Crypto. Many Chinese investors still trade through international exchanges using VPNs, while some businesses like Cango set up Bitcoin mining facilities overseas to take advantage of opportunities from the international market.

Legal research – an inevitable step
China is gradually shifting from an "absolute ban" approach to a stricter management model. The research, led by Professor of Law Yang Dong from Renmin University of China, pointed out three main focuses:

- Perfecting the method of handling Crypto in legal cases
- Proposing a domestic digital asset management model
- Minimizing national financial risks

Although no specific measures have been announced, the workshop emphasized the need for coordination between judicial and regulatory agencies to find suitable solutions.

Hong Kong – an open problem in China's strategy
While the mainland maintains the ban, Hong Kong has a different approach. The SAR government is pushing for an open-door policy towards Crypto, focusing on financial derivatives, faster licensing, and expanding virtual asset trading.

This poses a strategic dilemma for China: How can we tightly control Crypto while still taking advantage of the technological and financial advantages of this sector?

Conclusion: Looking for a regulatory model instead of just banning
Despite the strict ban, China cannot ignore the strong development of Crypto. The push for legal research is a signal that the government is looking for a suitable regulatory model, instead of simply imposing bans. As Hong Kong opens up and Crypto continues to grow strongly globally, China may have to consider a more flexible strategy to avoid being left behind in the digital finance race.