Why Trump believes ‘China is big into crypto’ despite ban
President Donald Trump informed 60 Minutes on November 2 that China poses a aggressive risk in crypto, warning that “China is getting into it very big proper now.”
The declare surfaces a paradox. Beijing banned crypto buying and selling and mining in 2021, but Trump frames the nation as America’s principal rival in digital property.
The disconnect doubtless isn’t about secret intelligence or a coverage reversal that went unnoticed, however somewhat about conflating Hong Kong’s licensed market, Beijing’s central financial institution digital foreign money ambitions, and grey market stablecoin flows into a single “China” narrative.
The timing issues as a result of Hong Kong’s Securities and Futures Commission introduced, throughout Hong Kong FinTech Week, that it’s going to loosen up guidelines permitting licensed digital asset platforms to faucet into international order books and liquidity swimming pools, in the future later.
The transfer deepens Hong Kong’s integration with worldwide crypto markets whereas the mainland maintains its prohibition.
Trump’s assertion, whether or not intentional or not, captures an actual dynamic: “China” operates throughout a number of crypto fronts concurrently, simply not those most individuals assume.
Mainland ban stays operational
The People’s Bank of China declared all cryptocurrency transactions unlawful on September 24, 2021, concentrating on each peer-to-peer buying and selling and mining operations.
The ban prohibits home exchanges, criminalizes facilitation providers, and blocks international platforms from serving customers on the mainland. No main outlet or authorized tracker studies a reversal of that framework as of press time.
The ban achieved its fast targets, which have been to drive exchanges offshore, collapse home mining operations, and prohibit retail entry to speculative tokens.
What it didn’t eradicate have been the explanations individuals needed crypto within the first place: capital mobility, cross-border settlement pace, and mistrust of intermediaries.
Those forces relocated to Hong Kong’s licensed regime, moved into over-the-counter stablecoin channels, or discovered expression in Beijing’s personal digital foreign money venture.
Hong Kong because the permissive carve-out
Hong Kong’s regulatory method runs in the wrong way. The SFC launched a licensing framework for digital asset buying and selling platforms in June 2023, granting retail entry to authorised tokens on compliant exchanges.
By April 2024, Hong Kong had authorised spot Bitcoin and Ethereum ETFs, merchandise beforehand unavailable on the mainland, offering institutional traders with a regulated on-ramp.
The November 3 announcement extends that permissive stance additional. Licensed platforms can now hyperlink to international liquidity sources somewhat than working remoted Hong Kong-only order books.
The change erases a structural drawback, specifically that Hong Kong’s home market alone can’t generate the depth or spreads aggressive with Binance or Coinbase.
Connecting to worldwide liquidity transforms licensed Hong Kong platforms into viable options for stylish merchants in search of regulatory cowl with out compromising execution high quality.
This is the mechanism that makes Trump’s framing coherent even when technically imprecise. When he says “China,” he’s doubtless bundling a Special Administrative Region with de facto coverage autonomy into the identical psychological class because the mainland.
Hong Kong’s strikes, retail entry, ETFs, and now international liquidity, create the looks of “China” advancing in crypto, whereas Beijing’s buying and selling ban stays in place.
The CBDC layer: digital cash, not crypto
Beijing’s e-CNY pilot represents the world’s largest central financial institution digital foreign money deployment by transaction quantity.
Cumulative transactions exceeded ¥7 trillion by mid-2024, in line with studies, spanning retail funds, authorities disbursements, and company settlements.
Hong Kong started accepting e-CNY at native retailers in May 2024, linking the mainland’s digital foreign money infrastructure to a world monetary hub.
The e-CNY features as programmable state cash, centralized, surveilled, and designed to strengthen somewhat than problem Beijing’s financial management.
It shares no philosophical DNA with Bitcoin or decentralized finance. Yet its scale and cross-border extension into Hong Kong contribute to the notion that “China” operates on the frontier of digital property.
Trump’s remarks conflate this state-issued digital cash with permissionless crypto, however the confusion tracks a real actuality. China instructions probably the most superior retail CBDC in manufacturing, giving it credibility when claiming management in digital finance even because it bans decentralized options.
Chinese regulators are learning offshore yuan-backed stablecoins issued via Hong Kong, aiming to seize cross-border settlement flows at the moment dominated by dollar-pegged tokens, in line with studies from final 12 months.
The proposal would let Beijing keep capital controls on the mainland whereas providing exporters a compliant digital settlement instrument overseas.
Gray market stablecoin adoption and hashrate
Enforcement gaps and financial incentives created a parallel system. Chinese exporters are more and more accepting USDT for cross-border funds, thereby bypassing the gradual means of financial institution transfers and capital controls.
The adoption isn’t centrally coordinated, however it’s widespread sufficient that Beijing can’t ignore it.
Stablecoin flows also increased in Russia-China commerce channels as Western sanctions sophisticated conventional banking rails, making digital {dollars} a settlement layer for transactions that the formal monetary system struggles to course of.
This over-the-counter exercise explains why the assertion “China is big into crypto” feels true to merchants and companies, even when mainland retail buying and selling stays banned.
The distinction between prohibited hypothesis and tolerated business utilization creates space for stablecoins to operate as infrastructure somewhat than funding property.
Beijing hasn’t legalized this exercise, however it hasn’t stamped it out both, making a calculated ambiguity that enables cross-border commerce to proceed. At the identical time, the state research find out how to channel these flows into manageable devices.
Additionally, China’s hashrate didn’t fall to zero after the 2021 mining crackdown. Cambridge’s mining map signifies ongoing exercise, doubtless stemming from operations that relocated to distant provinces or transferred {hardware} overseas whereas sustaining Chinese possession.
More importantly, Chinese corporations proceed to fabricate the tools that secures international cryptocurrency networks.
Bitmain, the dominant ASIC producer, operates out of Beijing and continues to broaden its manufacturing capability in Southeast Asia and North America.
Even if no Bitcoin mining have been to happen in China, the nation would stay deeply embedded in crypto infrastructure via its {hardware} provide chains.
Trump says ‘China is big into crypto’: what it doubtless means
Trump’s assertion (most likely) doesn’t replicate a mainland coverage reversal or undisclosed intelligence. It displays a strategic actuality extra complicated than binary narratives permit.
The “China is big into crypto” comment collapses a number of distinct phenomena. Hong Kong’s licensed market is now linked to international liquidity, as Beijing’s over ¥7 trillion CBDC program extends into Hong Kong.
Exporters are settling commerce in USDT despite capital controls, and Chinese {hardware} producers are supplying international mining infrastructure.
The Hong Kong liquidity announcement is important as a result of it expands the channel via which Chinese capital can entry crypto markets legally.
Licensed platforms connecting to Binance or Kraken order books present mainland traders with offshore pathways that seem much less like evasion and extra like regulatory arbitrage.
The notion that “China” competes in crypto intensifies not as a result of Beijing lifted its ban however as a result of Hong Kong constructed a compliant different that achieves related market entry via a distinct authorized structure.
Trump campaigned on making America the crypto capital, framing the problem as a binary competitors for primacy.
His remarks deal with China as a unitary actor, when in actuality, the nation entails jurisdictional splits, state versus personal initiatives, and retail bans coexisting with institutional entry.
Yet the core concern holds: China maintains a number of positions in crypto despite its home prohibition.
The aggressive panorama Trump describes exists, however it doesn’t take the shape most assume.
The mainland ban stays intact. The risk originates from Hong Kong’s licensed different, Beijing’s CBDC infrastructure, and exporters using stablecoins, somewhat than from a sudden Chinese adoption of decentralized finance.
What Trump referred to as “getting into it very big” is much less a coverage shift than a recognition that China discovered methods to take part in crypto markets with out legalizing the exercise its regulators concern most, which is uncontrolled retail hypothesis in permissionless property.
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