China has tightened control over the overseas assets of wealthy citizens. As of 22 October 2026, the grace period for disclosing information and settling tax liabilities on certain offshore trusts came to an end. Experts suggest that the new restrictions may increase interest in dollar-pegged digital assets.
WHY CHINA IS TIGHTENING CONTROL
As South China Morning Post reports, analyst Hugh Harsono believes that the Chinese authorities are seeking to tighten control over the export of capital abroad.
At the same time, the country is tightening restrictions on cryptocurrencies, stablecoins and digital financial assets. Cryptocurrency transactions in mainland China remain illegal.
On 28 September 2026, China's Ministry of State Security warned about the use of virtual currencies for cybercrime and espionage.
HOW WEALTHY CHINESE USE CRYPTOCURRENCY
Despite the bans, some affluent citizens use digital assets to transfer funds abroad.
In June 2026, a Shanghai court sentenced five people to terms of up to six years in prison for organising illegal international transfers via cryptocurrency.
The total value of the transactions exceeded $29 million. The services were offered to wealthy Chinese who wished to place part of their capital abroad.
According to Harsono, tighter tax control could push investors to seek alternative ways of storing and transferring money.
WHY THE DIGITAL DOLLAR IS BECOMING MORE ATTRACTIVE
Around 99% of the world's stablecoins are pegged to the US dollar. Such digital assets allow funds to be stored and transferred without relying exclusively on traditional banking channels.
At the same time, transactions with them are also governed by legislation, and in China the use of cryptocurrencies carries the risk of criminal prosecution.
The analyst believes that the restrictions may inadvertently increase demand for dollar-denominated digital assets. However, there is as yet no confirmed data on rising demand specifically because of the new tax requirements.
HOW CHINA IS TRYING TO REDUCE ITS DEPENDENCE ON THE DOLLAR
China is developing its own financial instruments, including the digital yuan (e-CNY) and the Cross-Border Interbank Payment System (CIPS).
The authorities are also promoting settlements in yuan through state banks and the international Belt and Road Initiative.
