The “Compliant Citizen” Dilemma and the “Civic Dividend” of Bitcoin | by Daii | The Capital | Jun, 2025

After the closure of domestic platforms, Chinese traders turned to overseas markets, and the global Bitcoin trading landscape changed accordingly.

As I noted in 2021, among the world’s ten largest economies, only China prohibited banks and payment institutions from participating in Bitcoin trading. This pattern has remained largely unchanged. In major economies such as the United States, Japan, Germany, the United Kingdom, and South Korea, Bitcoin remains legal and freely tradable.

Since 2022, global economic turbulence and frequent interest rate hikes by the U.S. Federal Reserve have drawn capital away from emerging markets back to the U.S., placing additional pressure on China’s economy.

Particularly after Donald Trump returned to power, U.S. policy on digital assets underwent a crucial shift — from resistance to strategic absorption.

In 2024, Trump signed the Bitcoin Reserve Act, officially recognizing Bitcoin as a strategic reserve asset eligible for inclusion on the government balance sheet. The recently passed GENIUS Act (Governing Electronic Networks for Issued US-stablecoins) provided clear compliance pathways for stablecoins such as USDC and USDT. These are not just technical policy shifts but front-line maneuvers in a contest over monetary sovereignty.

Compared to the U.S., which is leveraging Bitcoin to counter inflation and reinforce its monetary dominance, China is more focused on maintaining industrial output, exports, and employment. With a still-dominant manufacturing base, China’s financial policy is not aimed at dominating global asset pricing, but rather at buffering the uncertainties of domestic economic restructuring.

In response to Trump’s Trade War 2.0 — revived tariffs, supply chain disruptions, and tightened chip sanctions — China needs a stable financial environment to absorb external shocks. “Stability” here means distancing itself from all high-volatility assets, no matter how innovative.

Bitcoin, by nature volatile and speculative, could — if tied to domestic financial markets — trigger a contagion of speculative behavior and secondary financial risks.

Thus, tightening regulation does not outright deny Bitcoin’s value, but acts as a buffer zone, delaying potential shocks to China’s financial system. With this context in mind, the challenges you face in moving funds in and out of crypto become easier to understand.