China’s Bitcoin legalization is set at 5%, but Beijing’s February 2026 Ban 2.0 introduced a significant challenge.

Traders on Polymarket are estimating the likelihood of China allowing onshore Bitcoin purchases at approximately 5%.

Initially, this figure may seem dismissive. However, it prompts the inquiry of whether the Chinese government will explicitly allow its citizens to exchange renminbi for Bitcoin within mainland China by the conclusion of 2026.

This distinction is significant, as the regulatory framework recently established by Beijing indicates a contrary direction.

The prediction market poses a binary question: Will the People’s Republic of China declare by December 31, 2026, that Chinese citizens can legally acquire Bitcoin with yuan within China?

The outcome depends on the announcement itself, rather than its execution. It does not consider Hong Kong sandboxes, offshore products, or institutional workarounds. This serves as a test of onshore banking systems and legal purchasing avenues, the very infrastructure that China has systematically dismantled over the past year.

The ban has intensified

In February 2026, Chinese regulators released a comprehensive joint notice that effectively established “Ban 2.0.” This document reiterates that activities related to virtual currencies are deemed illegal financial activities and that crypto does not hold legal tender status.

Moreover, it goes beyond the framework set in September 2021, specifically targeting marketing, traffic facilitation, payment processing, and even the naming or registration of entities that support crypto activities.

The notice emphasizes stablecoins as a key area for enforcement, prohibiting unauthorized offshore issuance of yuan-pegged stablecoins and framing them as potential vectors for anti-money laundering issues, fraud, and unauthorized cross-border fund transfers.

Additionally, it introduces a civil deterrent: investing in virtual currencies or related products is now considered a violation of “public order and good morals,” rendering such transactions legally void and imposing personal losses on investors.

This was not merely a campaign memo. It revoked the 2021 notice, establishing itself as the new legal standard. For those betting on a reversal by year-end, the timeline appears daunting.

Policy layer	What it is (plain English)	Does this satisfy Polymarket “YES”?	Mainland status (post–Feb 2026 framework)	Hong Kong “pressure valve”?
Onshore retail purchase (RMB→BTC)	Ordinary individuals can legally convert yuan into Bitcoin within mainland China (through legal apps/exchanges/OTC).	Yes	Prohibited	No — HK does not alter the legality of onshore RMB→BTC purchases in the mainland.
Exchanges / trading venues (domestic licensing)	PRC-licensed crypto exchanges or trading venues operate legally and can serve mainland residents.	No	Prohibited / targeted	Yes — HK can license VASPs/venues, but this remains offshore and doesn’t legalize mainland venues.
Banking rails (RMB deposits/settlement)	Banks/payment firms can provide RMB accounts, deposits/withdrawals, and settlement/clearing for crypto-related transactions.	No (unless it explicitly enables legal RMB→BTC purchase onshore)	Targeted / prohibited (rails and facilitation are a focus)	Partial — HK banking rails can support licensed HK activity; doesn’t reopen RMB rails for mainland crypto trading.
Custody / brokerage products	Regulated entities can hold BTC for clients or offer brokered BTC exposure (funds, structured notes, wrappers).	No	Prohibited (treated as “virtual-currency related products/activity”)	Yes — HK can host regulated products (e.g., ETFs/custody) in a contained jurisdiction.
Mining legality	Mining is legal/regulated (licenses, taxes, grid access) rather than banned/punished.	No	Prohibited (no accommodation; enforcement may vary locally)	No — HK is not a mining hub; doesn’t legalize mainland mining.
Hong Kong access (ETFs / stablecoins)	Exposure via HK spot crypto ETFs; stablecoins under HK licensing; tokenization pilots under HK rules.	No (explicitly excluded by the market’s “within China” framing)	Not applicable to mainland legality; mainland restrictions still apply	Yes — ETFs + stablecoin licensing + supervised pilots act as offshore experimentation without mainland liberalization.
Offshore institutional workarounds	Offshore exchanges/products/institutions offer BTC exposure; mainland users access via VPNs/OTC/cross-border channels.	No	Targeted / prohibited (especially solicitation/marketing/traffic facilitation and cross-border fund flow vectors)	Partial — HK can host products, but “mainland access” remains politically gated and doesn’t meet the onshore purchase criterion.

Hong Kong as a controlled experiment

Beijing’s strategy regarding crypto becomes more apparent when viewed through the lens of Hong Kong’s function as a regulatory testing ground.

In April 2024, Hong Kong introduced Asia’s first spot Bitcoin and Ethereum ETFs, explicitly promoted as products for a jurisdiction where mainland trading remains prohibited.

The city’s stablecoin licensing framework came into effect in August 2025, although as of early 2026, the Hong Kong Monetary Authority’s register indicated no licensed issuers.

The first batch is anticipated in March 2026, with regulators indicating it will be “a very small number.”

Even offshore experimentation is subject to political limitations. The Financial Times reported that Chinese tech giants, including Ant Group and JD.com, halted plans for a Hong Kong stablecoin following intervention from Beijing.

The implication: innovation can advance in controlled settings, but only when it supports rather than undermines central oversight.

This framework allows Beijing to authorize the use of contained pilots, such as ETFs, tokenization frameworks, and licensed stablecoins, while maintaining a strict barrier against onshore renminbi-to-Bitcoin conversions.

Hong Kong serves as a pressure valve, not a precursor to mainland policy.

Timeline illustrates China’s dual-track crypto policy from 2021 to 2026, showing mainland prohibition expanding while Hong Kong pilots controlled experiments with ETFs and stablecoin licensing.

The tokenization paradox

China’s February 2026 regulatory initiative also clarified where digital assets are allowed: in closely monitored, permissioned tokenization lanes.

On February 6, the China Securities Regulatory Commission tightened oversight for offshore tokenized asset-backed securities linked to onshore assets, mandating enhanced filings, disclosures, and cross-border coordination.

On the same day, a notice from the People’s Bank of China coupled the virtual currency crackdown with language indicating that tokenized products backed by onshore assets would undergo rigorous vetting.

Three days later, Reuters characterized the action as establishing a legal pathway for offshore issuance of tokens backed by mainland assets, even as real-world asset issuance domestically remains prohibited.

This interpretation aligns with Beijing’s broader stance: digital finance is acceptable when it is auditable, state-supervised, and routed through authorized entities. Unregulated trading is not.

McKinsey projects a tokenized asset market capitalization of approximately $2 trillion by 2030, with an optimistic scenario around $4 trillion, excluding “crypto like Bitcoin.”

Beijing can be both aggressively pro-tokenization and anti-Bitcoin trading simultaneously, as tokenization aligns with the state’s surveillance and control framework.

One data point complicates the tightening narrative: China’s Bitcoin mining share rebounded to about 14% by October 2025, according to the Hashrate Index, with some industry estimates placing it between 15% and 20% of global mining.

This resurgence occurred despite the mining ban and suggests enforcement gaps at the local level.
However, this dynamic reflects compliance drift, not a policy reversal. Local tolerance of underground mining does not equate to legal clarity at the national level, and Beijing’s February 2026 notice makes no provisions for mining activities.

Chart shows China’s Bitcoin mining share rebounded from near zero after the 2021 ban to 14.1% by October 2025, illustrating the gap between official policy and underground enforcement reality.

What 5% odds actually price

Polymarket’s current pricing reflects a collection of low-probability scenarios.

The most likely route to a “Yes” resolution involves a narrow onshore pilot: a state-supervised platform in a free-trade zone that allows limited renminbi-to-Bitcoin purchases, subject to strict capital limits and know-your-customer regulations.

Such a pilot would necessitate explicit licensing pathways, access to banking services, and a departure from “illegal financial activity.”

Nothing in the existing regulatory environment indicates a shift toward that outcome. The February 2026 framework moved the Overton window in the opposite direction, categorizing virtual-currency businesses not as a gray area to be tolerated but as illegal activities to be eradicated.

A secondary scenario, which involves indirect Bitcoin exposure through tightly regulated products, might gain traction, such as mainland investors accessing Hong Kong crypto ETFs through approved channels.

However, this would not meet Polymarket’s resolution criteria, which depend on a legal onshore renminbi-to-Bitcoin purchase.

Sovereignty lens and signals worth watching

Beijing’s stringent stance also aligns with broader concerns regarding monetary sovereignty.

In 2025, the Bank for International Settlements noted that over 99% of stablecoins are denominated in US dollars, raising alarms about stealth dollarization and evasion of capital controls, which are precisely the vulnerabilities Chinese regulators cite to justify crypto restrictions.

For a government that considers capital controls essential to macroeconomic stability, allowing unregulated renminbi-to-Bitcoin conversion would equate to creating a permanent leak in the dam.

The political cost of such a reversal, particularly in the absence of a crisis that compels Beijing’s action, appears prohibitively high.

If the odds were to shift significantly, certain triggers would precede the change. A formal declaration from the State Council or the People’s Bank of China establishing a legal pathway for licensed exchanges or brokers to operate domestically would be the clearest indication.

Banking permissions enabling renminbi accounts to settle transactions for crypto platforms would be another. Changes in language within official notices, from “illegal financial activity” to “regulated activity,” would suggest a conceptual reframing.

Free-trade zone announcements explicitly allowing the purchase of renminbi with Bitcoin within designated geographic areas could meet Polymarket’s resolution criteria without necessitating nationwide legalization. None of these signals have emerged.

The regulatory trajectory since late 2025 has been consistently unidirectional: tighter controls, clearer prohibitions, and more explicit civil and criminal deterrents.

The real bet

Polymarket traders are not assessing whether China will “embrace crypto” or “become blockchain-friendly.” They are evaluating the likelihood that Beijing will reverse a recently reinforced policy framework within a year, allowing citizens to convert state currency into an asset the government considers illegal, and do so without any clear political or economic catalyst.

What Beijing has instead constructed is a bifurcated system: permissioned digital finance under state oversight, and ongoing prohibition of decentralized trading.

Hong Kong can facilitate experiments. Tokenization can advance on controlled pathways. Stablecoins can receive licenses under stringent conditions. However, onshore renminbi-to-Bitcoin purchases remain incompatible with the regulatory logic that China has been solidifying into law throughout 2025 and early 2026.

The framework is not ambiguous. It is explicit, codified, and expansive. Wagering on a reversal by December 2026 is not merely betting against current policy, but betting against the structure China has just completed.

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