Virtual currency trading faces the strictest regulation? People's Bank of China: The era of digital RMB interest calculation begins

China’s central bank 2026 key focus: comprehensive upgrade of virtual currency trading regulation, strict investigation of domestic and overseas exchanges, and prohibition of financial institutions providing payment support. Digital renminbi upgraded to version 2.0, enabling interest accrual and inclusion in deposit insurance.

Three Major Upgrades in Virtual Currency Trading Regulation in 2026

The People’s Bank of China explicitly states that virtual currency trading speculation remains the top priority in financial risk prevention and control. In 2026, regulation will achieve a full-chain upgrade, marking the most stringent policy tightening since the complete ban on virtual currency trading in 2021. The central bank emphasizes that virtual currencies lack national credit backing, and their trading activities are prone to illegal fundraising, money laundering, and other criminal activities, severely endangering public property safety.

The first major upgrade is joint crackdown on domestic and overseas exchanges. Regulatory authorities will strictly investigate violations by virtual currency exchanges providing services to Chinese users, regardless of where the exchange is registered. As long as they serve Chinese users, they will face law enforcement pressure. This cross-border regulatory coordination means that the gray area of virtual currency trading via VPNs or overseas accounts will be significantly compressed.

The second major upgrade is cutting off payment channels for financial institutions. The central bank will strictly prohibit financial institutions from providing any form of payment settlement support for virtual currency trading, including bank transfers, third-party payments, credit cards, etc. This “cutting off blood” strategy will fundamentally restrict the channels through which funds flow into the virtual currency market. Past attempts by some investors to evade monitoring through splitting small transfers or using friends’ accounts will be easier to detect with the 2026 technological upgrades.

The third major upgrade is precise technological monitoring. The central bank will upgrade its technology to enable accurate monitoring and early warning of virtual currency trading activities, maintaining a high-pressure crackdown on illegal and non-compliant behaviors, and effectively safeguarding financial order. This may include blockchain tracking, big data analysis, AI recognition, and other cutting-edge technologies, making any attempt to hide transactions at risk of being uncovered.

Three Lines of Defense in Virtual Currency Trading Regulation

Exchange Defense Line: Strict investigation of violations by domestic and overseas exchanges serving Chinese users, regardless of registration location

Payment Defense Line: Ban on financial institutions providing any form of payment settlement support, cutting off capital channels

Technology Defense Line: Upgrade monitoring and early warning systems to achieve precise tracking of trading activities and high-pressure enforcement

Revolutionary Upgrade of Digital Renminbi 2.0

Contrasting sharply with strict regulation of virtual currency trading, the digital renminbi enters a new stage of high-quality development. According to the central bank’s “Action Plan,” in 2026, the digital renminbi will officially upgrade from the cash-based 1.0 version to the deposit-based 2.0 version, a milestone upgrade. The most core change is that commercial banks’ real-name wallet balances will accrue interest according to regulations and be included in deposit insurance coverage.

The introduction of interest accrual fundamentally changes the incentive structure of the digital renminbi. In version 1.0, digital renminbi wallets do not pay interest, leading users to only keep small amounts for daily payments, while larger funds remain in bank accounts to earn interest. This design limited the widespread adoption of the digital renminbi. The interest feature in version 2.0 removes this barrier, allowing users to confidently store more funds in digital wallets, enjoying payment convenience without sacrificing interest income.

Including digital renminbi in deposit insurance further enhances security. China’s deposit insurance system provides up to 500,000 RMB protection per depositor per bank. Incorporating digital renminbi into this coverage means users holding digital currency enjoy the same safety as traditional bank deposits, significantly boosting trust in digital renminbi.

This adjustment not only increases user willingness to hold digital renminbi but also promotes comprehensive expansion of merchant scenarios. As users are willing to keep more balance in their wallets, the frequency of using digital renminbi for daily consumption, bill payments, and other livelihood payments will rise sharply. Data from the central bank shows that user activity and wallet balance scale in pilot regions are directly related; the interest feature in version 2.0 is expected to drive exponential growth in active users and transaction volume.

Meanwhile, digital renminbi, through the “Account System + Smart Contracts” architecture, balances payment efficiency and regulatory security. Smart contract functions enable targeted payments, conditional payments, and other innovative scenarios, such as government subsidies limited to specific goods or salaries transferred only to employees’ accounts. This programmability is impossible with traditional cash, providing technical support for precise policy implementation.

Cross-border payment applications are also steadily advancing. Digital renminbi has launched cross-border payment pilot programs in some countries and regions, with further expansion planned in 2026. This is significant for promoting RMB internationalization, reducing cross-border payment costs, and improving transaction efficiency. Compared to traditional cross-border payments relying on SWIFT, digital renminbi can achieve real-time peer-to-peer settlement, greatly reducing intermediary costs.

Fundamental Differences Between Virtual Currency and Digital Renminbi

Officials from the central bank state that distinguishing the fundamental boundary between virtual currency trading and digital renminbi is key: the former is a speculative tool, while the latter is a legal digital currency backed by national credit. This qualitative difference provides the policy basis for their treatment. Virtual currencies are essentially decentralized private currency experiments, whose value depends entirely on market consensus, with no sovereign or central bank backing.

In contrast, digital renminbi is a legal digital currency issued by the People’s Bank of China, with the same legal status as banknotes and coins, backed by the Chinese government’s credit. This fundamental difference determines their different roles in the financial system: virtual currencies are high-risk speculative assets, while digital renminbi is a safe and reliable payment tool.

The 2026 policy of simultaneous regulation and development not only safeguards against systemic financial risks but also provides a secure and reliable payment infrastructure for digital economy innovation. This “strict crackdown on one hand, support on the other” strategy reflects China’s clear stance in fintech: firmly oppose decentralized private currencies challenging sovereign currency, while actively embracing central bank-led digital currency innovation.

For investors, this policy signal is very clear: participating in virtual currency trading within China carries increasing legal and practical risks, while digital renminbi will become the only officially recognized digital payment innovation direction.