Global demand strengthens gold buying in China as cryptocurrencies face tighter restrictions
China’s approach to financial stability is increasingly clear: build physical reserves, tighten state control over digital money, and limit exposure to decentralized alternatives. In early 2026, this strategy was reinforced by two parallel developments: the continued large-scale accumulation of gold by the country’s central bank and a renewed regulatory crackdown on cryptocurrency activity.
Together, these measures underscore a long-standing policy preference on Beijing’s part: prioritizing tangible assets and sovereign-controlled monetary systems over decentralized or privately issued financial instruments.
China extends its gold buying streak
In January 2026, the People’s Bank of China added another 40,000 troy ounces of gold to its reserves, extending its accumulation streak to 15 consecutive months. The purchase brought China’s total official gold holdings to about 74.19 million ounces, valued at about $369.58 billion at current prices.
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| Fountain:Bloomberg official |
The timing of the purchase especially caught the attention of analysts. It came amid increased volatility in global bullion markets, following a sharp correction in gold prices. After rising nearly 30 percent at the start of the year, driven largely by speculative buying, gold prices fell nearly 10 percent in a single trading session before stabilizing. Since then, prices have partially recovered and are trading near $4,968 per ounce, although volatility remains high.
China’s decision to continue buying during a correction signals confidence in gold’s long-term role as a store of value. Market watchers say the steady pace of accumulation reflects strategic planning rather than short-term price speculation.
Why gold is still important to Beijing
Gold has long played a unique role in China’s financial strategy. Unlike foreign exchange reserves, bullion carries no counterparty risk and cannot be frozen or sanctioned by external authorities. In an era marked by geopolitical tensions, trade disputes and monetary uncertainty, gold offers a form of financial insurance.
Chinese authorities have consistently emphasized diversification away from over-reliance on a single foreign currency. While the US dollar remains dominant in global reserves, gold provides a neutral asset that can help stabilize national balance sheets during periods of financial stress.
Analysts note that China’s gold holdings still represent a smaller percentage of total reserves compared to some Western economies. This suggests there may be room for further buildup if Beijing continues its current trajectory.
Central banks around the world are following a similar path
China is not acting in isolation. According to data from the World Gold CouncilCentral banks around the world purchased more than 860 metric tons of gold in 2025. While this figure was slightly lower than the record levels above 1,000 tons seen in previous years, it is still historically strong.
Total annual demand for gold exceeded 5,000 tonnes in 2025, underscoring sustained institutional and investor interest in the metal. Analysts say this consistent demand has helped establish a firm price floor, even during periods of market turbulence.
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| Fountain:Global gold demand, WGC |
Emerging economies in particular have been active buyers, often motivated by the same concerns driving China’s strategy: currency risk, geopolitical uncertainty and the desire to diversify reserves away from dollar-denominated assets.
China’s continued buildup may encourage other developing nations to follow suit, reinforcing gold’s status as a cornerstone of global reserve management.
Bullish on bullion, bearish on cryptocurrencies
While China has embraced gold, it has taken a markedly different stance on cryptocurrencies. On February 6, 2026, Chinese authorities issued a new regulatory notice reaffirming and expanding existing restrictions on digital assets.
The notice made several positions explicit. Cryptocurrencies were denied legal status as money or financial instruments. Commercial activities related to cryptocurrencies were classified as financial crimes. Foreign cryptocurrency platforms were banned from operating within China’s borders.
Regulators placed particular emphasis on unauthorized yuan-pegged stablecoins issued overseas, as well as offshore tokenization of real-world assets pegged to Chinese holdings. Authorities cited risks of capital flight, financial instability and threats to monetary sovereignty as main concerns.
The move reinforced China’s long-standing opposition to decentralized cryptocurrencies and private digital money systems.
A regulatory pattern that lasts a decade
China’s 2026 action fits into a clear historical pattern of tighter controls on crypto activity.
In 2013, banks and payment companies were banned from providing Bitcoin-related services. In 2017, initial coin offerings were banned and domestic cryptocurrency exchanges were shut down. In 2021, authorities imposed a nationwide ban on cryptocurrency mining and declared all cryptocurrency transactions illegal.
The 2026 advisory did not introduce an entirely new policy direction, but instead reaffirmed existing rules while expanding their application to cover emerging areas such as offshore stablecoins and the tokenization of real-world assets.
Officials continue to cite concerns about money laundering, speculative excess, consumer protection and loss of control over capital flows.
Digital yuan takes center stage
China’s restrictive stance on cryptocurrencies is closely linked to its promotion of the digital yuan, also known as e-CNY. The central bank digital currency is designed to be the only officially authorized digital payment system in the country.
e-CNY has been piloted in more than 20 cities since 2020 and is increasingly integrated into public services, transportation and retail payments. Authorities see it as a tool to modernize payments while maintaining full state supervision of the monetary system.
Private cryptocurrencies and stablecoins are considered competitive alternatives that could undermine this goal. By limiting crypto activity, regulators aim to clear the way for broader adoption of the digital yuan.
What the latest rules mean for cryptocurrency users
The 2026 advisory does not penalize individual ownership of cryptocurrencies. Technically, Chinese residents can still own previously acquired digital assets. However, trading, mining, and commercial activities involving cryptocurrencies remain illegal.
Offshore platforms are largely inaccessible to Chinese users due to internet restrictions and law enforcement measures. Companies offering cryptocurrency-related services face increased legal risks, particularly if they facilitate yuan-based transactions or target Chinese customers.
For global markets, China’s stance has historically triggered short-term volatility. Major regulatory announcements in the past have often coincided with temporary sell-offs, followed by longer-term recoveries as markets adjusted.
Recent market weakness, including Bitcoin’s drop below $65,000, has been attributed more to broader global market conditions rather than China-specific news, according to analysts.
A strategic division between assets
Taken together, China’s continued accumulation of gold and its strong stance against cryptocurrencies reveal a coherent policy framework. Physical reserves and state-controlled digital money are considered pillars of financial stability. Decentralized assets, on the other hand, are treated as sources of risk.
This approach reflects Beijing’s emphasis on monetary sovereignty. Gold strengthens balance sheets without external dependence. The digital yuan offers innovation without giving up control. Cryptocurrencies, which operate outside state frameworks, conflict with these priorities.
Implications for the global financial system
China’s strategy may have broader implications beyond its borders. As one of the world’s largest economies, its actions influence global asset allocation trends and regulatory debates.
Continued demand for gold from central banks could support prices in the long term, especially if other nations follow China’s lead. At the same time, China’s hardline stance on cryptocurrencies highlights the divergent regulatory paths emerging globally, with some countries embracing digital assets while others restrict them.
For investors, these developments underscore the importance of understanding geopolitical and regulatory contexts when evaluating both traditional and digital assets.
Conclusion
China’s financial policy direction in 2026 sends a clear message. Gold remains a reliable anchor in an uncertain world. State-controlled digital money is the future of payments. However, decentralized cryptocurrencies remain firmly outside the acceptable framework.
As global markets navigate volatility, inflation risks and shifting power dynamics, China’s preference for bullion over blockchain offers a revealing glimpse into how major economies can balance innovation with control in the years ahead.
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