Stablecoins are a form of virtual assets.
This refers to a meeting held on the 28th, the significance of which far exceeds that of the news headline itself.
The full suite of “national-level regulatory authorities,” including the Ministry of Public Security, the Cyberspace Administration of China, the Central Financial Commission, the Supreme People’s Court and the Supreme People’s Procuratorate, the State Administration of Foreign Exchange, the China Securities Regulatory Commission, and the National Financial Regulatory Administration, were all present. This alone indicates that the regulatory authorities consider issues related to virtual assets to have reached a stage where it is imperative to once again unify interpretations and coordinate actions.
However, what truly warrants discussion is a key statement made during the meeting: “Stablecoins are a form of virtual assets.” This marks the first time that Chinese official authorities have explicitly defined stablecoins in formal documents and directly incorporated them into the regulatory framework governing “illegal financial activities involving virtual assets.”
From today onward, all ambiguity, speculation, and hopes for leniency that have surrounded stablecoins in recent years have completely disappeared.
In the past, the industry generally believed that although China’s regulatory stance on virtual assets was clear, there remained “ambiguities in wording” as to whether stablecoins fell within their scope. Many entrepreneurs interpreted this ambiguity as indicating that “there might be room for discussion,” and consequently repeatedly tested the boundaries in areas such as “cross-border payments,” “supply chain finance settlement,” “foreign trade payment services,” “on-chain renminbi,” and “blockchain pilots.”
However, the emergence of this statement today is equivalent to the regulators stepping forward and turning that blurred boundary into a clear line. Since stablecoins are now included within the category of virtual assets, they are automatically subject to all existing regulatory policies concerning virtual assets, with no exceptions and no pilot programs.
The most common misconception in the industry is to infer regulatory logic from a technological perspective.
Some believe that as long as the technology is advanced, security is enhanced, and underlying assets are transparent, policy space may be obtained. However, the regulators’ logic this time is very direct: the actual risks posed by stablecoins far outweigh their technological value.
The meeting communiqué repeatedly emphasized three matters—money laundering, fraud, and cross-border capital flows. These three elements constitute the complete chain of all cases involving virtual assets over the past three years. Whether in relation to money muling, online gambling, fraud fund chains, underground banks, or illegal foreign exchange transactions, stablecoins have become the core settlement layer. They address the elements most needed by grey-market operations, namely speed, cross-border capability, and difficulty of tracing, and thus naturally become the starting point of risk in the eyes of regulators.
As long as this risk chain remains unresolved, discussing the commercial value of stablecoins is meaningless. The regulators’ priority has always been “risk first, innovation later.” Under current practical conditions, stablecoins cannot meet requirements such as Know Your Customer (KYC), Anti-Money Laundering (AML), and capital account regulations, which determines that there will be no policy window for them.
Many in the industry interpret the regulatory logic of mainland China alongside that of Hong Kong, Singapore, and the United States within the same framework, believing that what is being done overseas will eventually be discussed in China. However, this meeting has provided the only correct approach to judgment: China will not discuss stablecoins using the “same path.” China’s regulatory objective has never been to “make the market more efficient,” but rather to “make risks more controllable.”
Once this characterization is made explicit, all so-called “niche innovations,” “small-scale pilots,” “regulatory sandboxes,” and “on-chain renminbi” lose their practical foundation. The regulatory attitude is not merely “strict,” but rather a “direct termination of possibility.”
Over the past few years, many entrepreneurial teams have repeatedly asked the same questions: Is it possible to engage only in on-chain technology? Is it possible to avoid direct user contact and focus solely on system development? Is it possible for an overseas entity to handle issuance while the domestic team handles technology? Is it possible to explore cross-border financial pilots in free trade zones? From today onward, these questions no longer require explanation.
Because once stablecoins are defined as virtual assets, they fall directly under the overarching framework that “activities related to virtual assets constitute illegal financial activities.” As long as any link in your business chain has connections with mainland China—such as users, funds, servers, promotion, settlement, technical services, matchmaking, or agency issuance—the level of risk is the same. There is no scenario where “technology companies are exempt” or “serving only B-end clients is legal.” The legal nature of stablecoins does not permit such distinctions.
Today’s signal is very clear: regulation has moved from “maintaining ambiguity” to “clarifying its stance.” Ambiguity was once a management tool to some extent, but stablecoins are no longer suitable for continued ambiguity, as they have become a “key element” in many cross-border criminal chains. As long as the social risks of this matter far outweigh its economic value, regulators will not provide any room for experimentation.
For entrepreneurs in China, if one wishes to engage in stablecoin-related activities, there is only one path: the project must be entirely overseas.
This requires an overseas legal entity, overseas bank accounts, overseas audits, overseas users, and overseas regulatory licenses. The most critical requirement is that no form of service may be provided to users in China, and the business chain must not involve Chinese funds. If any link falls within mainland China, the project automatically falls under the characterization of “illegal financial activities.” This is a very clear red line.
You will see that Hong Kong, Singapore, the Middle East, and Europe are continuously introducing regulatory frameworks for stablecoins. The regulatory objectives in these regions are entirely different: they aim to use stablecoins to enhance the international competitiveness of their local financial sectors. In contrast, the objective in mainland China is to ensure capabilities in capital account management and financial security.
Different objectives naturally lead to different paths.
For entrepreneurs in mainland China, this characterization is not a “comprehensive ban,” but rather a clear message: do not waste time on directions that cannot be implemented; instead, direct your efforts toward overseas markets.
It means that illusions regarding stablecoins in mainland China have ended, and that the industry no longer needs to repeatedly test “grey possibilities.” For entrepreneurs, this is bad news because a direction has been closed off; but it is also good news because judgments have become clear, eliminating the need to continue consuming time in the wrong direction.
The regulators have made their position clear; next, it is up to the industry itself to make its judgments.
