Self-custodial wallet / non-custodial software in China
Publisher of software where users hold their own private keys. The publisher never holds, controls, or has access to user funds.
Self-custodial wallet is not permitted in China.
Verdict Details
- Permitted
- no
- Local entity required
- No
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- No specific AML/KYC obligations attach to non-custodial wallet software publishers because all crypto-related business activities are illegal under Circular 237 (September 2021).
- The 2024 AML Law (effective 2025) expanded obligations to non-financial sectors, but the prohibition regime for crypto means enforcement is via criminal crackdown (PBOC, CAC, Ministry of Public Security) rather than compliance obligations.
- No legitimate AML registration, CDD, or SAR filing pathway exists for any crypto operator, including self-custodial wallet publishers.
Key Restrictions
- All virtual currency-related business activities are classified as illegal financial activities under Circular 237 (September 2021).
- Exchanges, custody providers, and payment processors (and by extension wallet software facilitating crypto activity) are banned; no licensing or registration regime exists.
- Publication of software that enables Chinese residents to engage in virtual currency transactions — even in a non-custodial manner — triggers enforcement risk under the prohibition regime.
- Neither registration nor licensing apply; operations are illegal under a prohibition framework, not a registration/licensing framework.
Key Risks
- Enforcement by PBOC, CAC, and Ministry of Public Security with potential Criminal Law penalties.
- No legal pathway to operate — even as a software publisher with no custody — making any offering to Chinese users a per se legal violation.
- Financial institutions in China are directed to monitor and block crypto-related activity, which could extend to blocking distribution channels (app stores, websites) for wallet software.
- Broader capital flight concerns may trigger SAFE scrutiny and cross-border enforcement actions.
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
Exchanges, custody providers, and payment processors: All banned; no licensing regime exists, as these facilitate prohibited activities like money laundering and capital flight.
Registration vs. licensing: Neither applies—operations are illegal under a prohibition regime, not a registration or licensing framework.
Key requirements: Irrelevant due to the ban; AML/KYC is not mandated for crypto but enforced via monitoring/blocking by financial institutions; no capital or local presence standards for crypto firms.
Application process: None available; attempts to operate trigger enforcement actions.
In September 2021, the People's Bank of China (PBOC) and nine other agencies issued the "Notice on Further Prevention and Control of Virtual Currency Trading Hype Risks" (Circular 237), classifying virtual currency-related business activities as illegal financial activities. This effectively bans all VASP operations, including exchanges, transfers, and custody services, with no licensing or AML compliance pathway available.
China's Anti-Money Laundering Law, amended in 2024 (effective 2025), expanded AML obligations beyond traditional financial institutions to include non-financial sectors and certain traders, while the 2021 'Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading' continues to prohibit financial institutions and payment companies from providing services to virtual asset service providers and criminalizes related activities.
No specific AML/KYC, CDD, or suspicious transaction reporting mandates exist for VASPs in China because such providers are illegal; instead, authorities enforce crackdowns via PBOC, Cyberspace Administration of China (CAC), and Ministry of Public Security.
No search results provide China-specific VASP regulations post-2021 ban; any operations would violate national law, potentially leading to penalties under the Criminal Law of the People's Republic of China.
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- high
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
No — publishing self-custodial wallet software for Chinese residents is not permitted; all crypto-related business activities are banned as illegal financial activities under Circular 237 (2021), and no licensing, registration, or compliance pathway exists for any crypto operator, regardless of custody status.
Questions this verdict aims to answer
- Does software publishing trigger VASP / MSB classification?
- Do AML obligations attach when no custody exists?
- What disclosure or consumer-protection rules apply?