The authorities have officially defined stablecoins for the first time—the fantasy surrounding stablecoins is over
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The authorities have officially defined stablecoins for the first time—the fantasy surrounding stablecoins is over
also means the industry no longer needs to repeatedly test around "gray-area possibilities."
Navigating Web3 tides with focused insightsSource: Man Qun Blockchain Legal Services
This was a meeting on the 28th, far more significant than the headline suggests.
The full lineup of China's "national-level regulatory team"—including the Ministry of Public Security, Cyberspace Administration, Central Financial Commission, Supreme People's Court, Supreme People's Procuratorate, State Administration of Foreign Exchange, China Securities Regulatory Commission, and National Financial Regulatory Administration—being present underscores that regulators now view cryptocurrency issues as requiring unified messaging and coordinated action.
But the key point worth discussing is a critical statement made during the meeting: "Stablecoins are a form of virtual currency." This marks the first time Chinese authorities have officially defined stablecoins in a formal document, explicitly placing them within the regulatory framework of "illegal financial activities involving virtual currencies."
From today onward, all previous ambiguity, speculation, and侥幸 surrounding stablecoins vanish completely.
In recent years, the industry has generally believed that while China’s stance on virtual currencies is clear, there remained a "gap in wording" regarding whether stablecoins fall under this category. Many entrepreneurs interpreted this gap as "potential room for discussion," leading repeated explorations into areas such as "cross-border payments," "supply chain finance settlements," "foreign trade代付," "on-chain RMB," and "blockchain pilots."
But with this single sentence, regulators have stepped forward to turn a blurry boundary into a solid line. Once stablecoins are classified under the umbrella of virtual currencies, they automatically fall under all prior regulatory policies governing virtual currencies—with no exceptions or pilot programs allowed.
A common misconception in the industry is attempting to predict regulatory logic through a technological lens.
Some believe that as long as the technology is advanced, security improved, and underlying assets transparent, policy space may open up. But regulators’ logic here is straightforward: the real-world risks posed by stablecoins far outweigh their technical value.
The meeting’s official release repeatedly emphasized three things—money laundering, fraud, and cross-border capital flows. These represent the complete pathway behind every major virtual currency-related case over the past three years. Whether it’s payment splitting, online gambling, fraud funding chains, underground banks, or illegal foreign exchange trading, stablecoins have become the core settlement layer. By solving the needs of "speed, cross-border reach, and difficulty in tracking," they’ve naturally become the starting point of risk from the regulator’s perspective.
As long as this risk pathway remains unresolved, discussing the commercial value of stablecoins is meaningless. Regulators have always prioritized "risk control over innovation." Under current conditions, stablecoins cannot meet requirements for KYC, AML, or capital account supervision—making any policy window impossible.
Many in the industry place mainland China’s regulatory approach in the same framework as Hong Kong, Singapore, or the U.S., assuming that if these regions pursue something, China will eventually follow. But this meeting has provided the only correct way to interpret it: China will not take the "same path" when discussing stablecoins. China’s regulatory goal has never been to "make markets more efficient," but rather to "keep risks under control."
With this clarity established, all so-called "loophole-based innovations," "small-scale pilots," "regulatory sandboxes," and "on-chain RMB" initiatives lose their practical foundation. The regulator’s stance isn’t merely "strict"—it’s "terminating possibility entirely."
For years, many startup teams have asked the same questions: Can we focus solely on blockchain technology? Can we avoid direct user interaction and only do system development? Can an overseas entity handle issuance while domestic teams provide technical support? Can we explore cross-border financial pilots in free trade zones? From today onward, none of these require further explanation.
Once stablecoins are defined as virtual currencies, they fall directly under the overarching principle that "activities related to virtual currencies constitute illegal financial activities." If any part of your business operation connects to mainland China—users, funds, servers, promotion, settlement, technical services, matchmaking, or代理 issuance—the risk level is the same. There is no distinction such as "tech companies are safe" or "B2B-only operations are legal." The legal nature of stablecoins no longer allows such differentiation.
The signal today is crystal clear: regulators have moved from "maintaining ambiguity" to "stating position explicitly." Ambiguity was once a management tool to some extent, but stablecoins are no longer suitable for such treatment—they have become a "critical component" in numerous cross-border criminal pathways. As long as their societal risks vastly exceed economic benefits, regulators will not allow any experimental space.
For Chinese entrepreneurs, there is now only one viable path if you want to work on stablecoins: the project must be entirely overseas.
Overseas legal entity, overseas bank accounts, overseas audits, overseas users, overseas regulatory licenses—and most critically: no provision of services in any form to users in China, and no connection to Chinese capital within the business flow. If any component touches mainland China, the project automatically qualifies as an "illegal financial activity." This is an extremely clear red line.
You’ll observe that Hong Kong, Singapore, the Middle East, and Europe are continuously rolling out stablecoin regulatory frameworks. Their regulatory goals differ entirely: they aim to enhance the international competitiveness of local finance. Mainland China’s goal, however, is to safeguard capital account control and financial security.
Different goals lead to different paths.
For mainland entrepreneurs, this classification isn't a "complete ban," but a definitive message: stop wasting time on directions that will never materialize, and redirect your efforts to overseas markets.
It means the dream of stablecoins in mainland China is over, and the industry no longer needs to repeatedly probe around "gray-area possibilities." For entrepreneurs, this is bad news—because one direction has closed. But it’s also good news—because clarity has arrived, eliminating further waste of time on wrong paths.
Regulators have made their position clear. Now, it’s the industry’s turn to make its choices.
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