Coinbase Accepts Chinese IDs Without Fiat: Deribit Deal Drives Gray Market Entry

Woofun AI reports that Coinbase has quietly enabled registration for Chinese users using second-generation ID cards and +86 phone numbers, a move confirmed by employees but lacking any official announcement. While the platform now accepts mainland Chinese addresses for identity verification, the operational scope remains strictly limited to on-chain transactions, creating a complex gray area for users like Wu who have tested the new system.

The mechanics of this registration shift were first observed on July 14, 2026, Beijing time, when screenshots began circulating across the X community and the V2EX forum detailing the new process. Tests indicate that the preliminary review for users submitting a Chinese ID card can be completed in as little as one minute, a stark contrast to the previous requirement for a passport and a Hong Kong address. Feedback from the V2EX forum further clarifies that the entire verification workflow takes approximately five minutes, and notably, the system waives the need for additional address proof documents when a mainland Chinese ID is used.

If a user opts to register with a passport instead, the platform reverts to requiring uploaded proof of address, suggesting a deliberate policy adjustment rather than a technical glitch. Coinbase employees have explicitly confirmed that the platform now supports identity verification with a mainland Chinese address, marking a substantial departure from prior protocols that mandated a Hong Kong address for Chinese nationals. Despite these functional changes, the company's publicly available identity verification documents still list only passports as acceptable for China, leaving the frontend online while official documentation remains unsynchronized.

Operational boundaries for these newly registered accounts are rigidly defined, restricting users to on-chain deposits, withdrawals, and trading while completely excluding fiat currency services. Chinese users cannot deposit or withdraw RMB via bank cards or third-party payment processors; the sole funding channel involves transferring crypto assets such as USDT or USDC from external wallets to the Coinbase address. This limitation aligns with Coinbase's broader compliance framework, which allows the firm to restrict specific account functions when local regulations prohibit certain services, meaning that opening registration does not equate to enabling full fiat integration.

The verification process itself imposes further constraints, as new accounts have limited functionality until government-issued documents are uploaded through the official verification portal and reviewed. The platform typically completes this review within 24 hours and will periodically mandate re-verification for record-keeping, compliance, and anti-fraud purposes, meaning each re-verification event serves as a critical checkpoint where the account status is reassessed.

Woofun AI data shows that the strategic motivation behind this move is heavily tied to the acquisition of Deribit, a crypto derivatives exchange purchased on August 14, 2025. Analysis by X user Phyrex (@PhyrexNi) suggests three verifiable clues pointing to Deribit as the primary driver, starting with the legal reality that U.S. law does not prohibit services to China, which is not on the OFAC sanctions list. While China prohibits foreign exchanges from serving domestic residents, Coinbase's lack of physical presence in the country creates an enforcement gap that the firm appears willing to exploit.

The second clue lies in the financial valuation of Deribit's customer base, which includes a significant proportion of Asian and Chinese users. In the 10-Q document submitted to the SEC, Coinbase valued Deribit's "customer relationships" intangible assets at approximately $1.059 billion, with an amortization period of 15 years, effectively paying a billion-dollar premium for access to this user segment. The third clue involves the integration of KYC systems, where customers migrating from the Deribit international exchange can trade options products directly within the Coinbase app without redoing verification.

This integration path suggests that opening accounts for Chinese users is a foundational step for expanding Deribit's options business into a market where competitors like Binance and OKX dominate futures and spot markets. In the first quarter of 2025, Deribit secured over 80% of the Bitcoin options market share and over 90% of the Ethereum options market share, providing the monopolistic liquidity depth necessary for this differentiated competition strategy.

Despite Coinbase's unilateral move, the regulatory backdrop in Beijing remains hostile, with red lines that have only hardened over the past five years. In September 2021, the People's Bank of China and ten other departments issued Document No. 237, explicitly declaring virtual currency-related activities as illegal financial activities and asserting long-arm jurisdiction over foreign exchanges serving domestic residents. This regulatory stance was reinforced on February 6, 2026, when the People's Bank of China, the China Securities Regulatory Commission, and eight other departments jointly issued a notice reiterating the illegality of domestic virtual currency activities.

The new notice specifically prohibits the tokenization of real-world assets (RWA) within the country and bans the issuance of stablecoins pegged to the RMB by domestic or foreign entities without consent. Regulatory officials have consistently voiced these concerns externally; Pan Gongsheng, Governor of the People's Bank of China, stated that stablecoins fail to meet basic customer identity verification and anti-money laundering requirements.

Furthermore, Wang Xin, director of the research bureau, highlighted the risks of stablecoins to the international monetary system at the Lujiazui Forum in June 2026, emphasizing the government's unwavering stance against such instruments.

The market context further complicates the regulatory landscape, as price volatility has drawn renewed scrutiny from official media. After Bitcoin reached a peak of over $120,000 in October 2025, the asset price plummeted to below $70,000 by February 2026, prompting official media outlets to emphasize the dangers of speculative trading. This volatility underscores the absence of any official signals suggesting a relaxation of China's ban on cryptocurrency trading or foreign exchange services. The breaking of the ice by Coinbase is therefore entirely a unilateral action, occurring in a vacuum where the regulatory wall has only risen higher, leaving no indication that the government intends to loosen restrictions on virtual currency activities or the provision of services by foreign platforms to domestic residents.

For Chinese users navigating this unannounced opening, the risk assessment reveals four critical areas of vulnerability that must be carefully considered. The first risk concerns the stability of account existence; if the system detects that a user's actual residence is in China, the account faces a high probability of freezing or restriction, and fiat currency functions will likely remain non-functional. Without an official announcement, the registration channel itself could be closed at any time, leaving users with no recourse to claim promises based on the current frontend availability.

The second risk involves funding channels, where the structure of on-chain-only deposits means asset movement relies entirely on blockchain transfers. If an account is restricted while holding positions, users may find themselves unable to withdraw fiat currency, and even on-chain withdrawals could be blocked pending additional verification. Coinbase's strict compliance reviews may require users to submit proof of asset sources and bank statements, and failure to provide these documents could result in withheld funds, with fees that are relatively high compared to peers.

The third risk is the legal and rights protection void, which is particularly acute given the regulatory environment. According to Document No. 237 and the February 2026 notice from eight departments, civil actions related to virtual currency trading by domestic residents are not protected by law, and foreign exchanges providing services to domestic residents are deemed illegal. As Phyrex notes, while Coinbase is compliant in the U.S., this status does not extend protection to Chinese users operating within China. The FTX incident serves as a cautionary tale; once a platform encounters trouble, the difficulty for users to protect their rights is extremely high if the platform is not compliant in their jurisdiction.

The claims process for FTX's Chinese users was exceptionally difficult, illustrating that platform-level compliance does not automatically translate into individual rights for Chinese users. The fourth risk is information asymmetry, as all current details stem from user tests and informal employee confirmations, while official documents contradict the frontend processes. Before a formal announcement is released, any judgments regarding the scope of opening, product permissions, and duration remain mere speculation.

The future trajectory of this situation hinges on three specific indicators that will determine whether this is a temporary test or the start of a new era. Users must watch for an official announcement from Coinbase that updates supporting documents to reflect the new ID card registration channel.

Additionally, the continued availability of the ID card registration channel itself serves as a key metric, as its sudden closure would signal a retreat. Finally, the gradual expansion of product permissions for restricted accounts will indicate the depth of Coinbase's commitment to this market. The direction of these three indicators will ultimately define the nature of this regulatory gray area and the level of risk Chinese users are willing to accept.