Stablecoins in 2025: You're in the Dream of the Red Chamber, I'm in Journey to the West
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Stablecoins in 2025: You're in the Dream of the Red Chamber, I'm in Journey to the West
We will focus on: "policy documents remain valid" and "dynamically assessing the development of foreign stablecoins".
Navigating Web3 tides with focused insightsAuthor: A Wang
2025 has been a year of brilliance and division for stablecoins—from the U.S. GENIUS Act's regulatory definition of stablecoins to Hong Kong's passage of the Stablecoin Ordinance, sparking intense discussions on offshore RMB stablecoins and debates over digital RMB, all leading up to the final chapter of stablecoins in mainland China.
Who is in the Red Chamber, and who is on the Journey to the West? Perhaps we already know the answer.
Yet, we must look beyond phenomena to grasp the essence. We need to clarify the underlying logic of stablecoins in 2025 and clearly see future development trends.
What fundamentally changed in 2025 regarding globally watched stablecoins—and what actually remained unchanged?
At the October 2025 Financial Street Forum Annual Conference, PBOC Governor Pan Gongsheng stated: "Since 2017, the People's Bank of China has jointly issued with relevant departments multiple policy documents aimed at preventing and managing risks associated with virtual currency trading speculation within the country. These policy documents remain effective. Going forward, the PBOC will continue working with law enforcement agencies to crack down on domestic operations and speculation involving virtual currencies, safeguarding economic and financial order, while closely tracking and dynamically assessing the development of overseas stablecoins."
We focus particularly on two key points: "policy documents remain effective" and "dynamically assess the development of overseas stablecoins."
1. Mainland regulation’s stance on virtual currencies remains unchanged—ongoing crackdown
1.1 Mainland regulation: the virtual currency nature of stablecoins
Recently, a meeting of 13 ministries provided a definition for the legal status of stablecoins under mainland China's regulatory framework.
On November 28, 2025, the People's Bank of China convened a coordination meeting on cracking down on virtual currency trading speculation. Officials from the Ministry of Public Security, Cyberspace Administration of China, Central Financial Commission, Supreme People's Court, Supreme People's Procuratorate, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Justice, People's Bank of China, State Administration for Market Regulation, National Financial Regulatory Administration, China Securities Regulatory Commission, and State Administration of Foreign Exchange attended the meeting.
The meeting noted that in recent years, all departments have conscientiously implemented decisions and arrangements made by the Party Central Committee and the State Council. In accordance with the requirements of the 2021 joint notice issued by the People's Bank of China and nine other departments titled "On Further Preventing and Managing Risks of Virtual Currency Trading Speculation," they have resolutely cracked down on virtual currency trading speculation and rectified market chaos, achieving significant results. Recently, due to various factors, speculative activities around virtual currencies have resurged, with related criminal offenses occurring from time to time, presenting new situations and challenges for risk prevention and control.
The meeting emphasized:
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Virtual currencies do not have legal status equivalent to fiat currency, lack legal tender power, and should not and cannot be used as currency in market circulation. Activities related to virtual currencies constitute illegal financial activities.
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Stablecoins are a form of virtual currency. Currently, they cannot effectively meet requirements for customer identification, anti-money laundering, and pose risks of being used for money laundering, fundraising fraud, and illicit cross-border fund transfers.
The meeting required all departments to adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 20th National Congress and subsequent plenary sessions, treat risk prevention as the perpetual theme of financial work, continue maintaining the prohibitive policy toward virtual currencies, and continuously crack down on illegal financial activities related to virtual currencies. All departments should deepen coordination, improve regulatory policies and legal foundations, focus on critical links such as information flows and capital flows, strengthen information sharing, further enhance monitoring capabilities, severely punish criminal activities, protect people's property safety, and maintain stability in economic and financial order.
1.2 Mainland regulation’s stance on virtual currencies has not changed at all
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Yesterday’s meeting was a concrete implementation of the 2021 document "On Further Preventing and Managing Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237), reflecting that "policy documents remain effective."
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Including stablecoins within the scope of virtual currencies = stablecoins / virtual currency-related business activities are illegal financial activities. "Continue maintaining the prohibitive policy toward virtual currencies, continuously crack down on illegal financial activities related to virtual currencies."
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The tone indicates an increasingly strict trend. Previously, illegal financial activities involving virtual currencies were listed exemplarily; now they are directly defined categorically.
Although virtual currencies are recognized in China as "virtual commodities" (with partial recognition of their property attributes in criminal and civil judicial practice), as "financial assets" or "settlement instruments," their foundation in mainland China has been completely eradicated.
1.3 Industry practitioners remain unchanged—treading carefully
Even though stablecoins have been categorized under mainland China’s virtual currency regulations, let us reflect: has anything truly changed for industry practitioners?
Not really. We continue going overseas, continuing our journey toward compliance—obtaining licenses in respective jurisdictions, meeting local regulatory requirements to operate legally. Still treading carefully.
2. The blockchain-based financial infrastructure has changed—dynamically assessing overseas stablecoin development
The U.S. GENIUS Act provides a clear definition for stablecoins:
"Payment stablecoins" are digital currencies based on distributed ledgers, pegged to national fiat currencies, and used for payments and settlements.
We will temporarily set aside various forms of digital currencies: stablecoins, deposit tokens, CBDCs.
So, what has changed?—The ledger underlying assets has changed, becoming more efficient, convenient, and globalized.
This is precisely what the West eagerly pursues—the point BlackRock's CEO described when stating that "tokenization of assets" will lead the next financial revolution; the innovation actively discussed at the Federal Reserve's "historic" meetings; the direction of transformation for the Nasdaq stock exchange: tokenized trading, tokenized IPOs, and 24/7 trading.
This is also the aspect mainland regulators must dynamically assess—the blockchain-based financial infrastructure, regardless of what digital assets run atop it.
2.1 Starting from the origin of blockchain
As Dr. Xiao said, we must start from the origin of blockchain, examine today’s widely discussed digital currencies / crypto assets, crypto markets, and the underlying blockchain technology from first principles and foundational perspectives.
What is the essence of finance? It is the temporal and spatial maturity mismatch of value. This essence remains unchanged across millennia.
New finance based on blockchain can greatly enhance financial efficiency:
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Across time. Manifested both in the time value of money and in transaction and settlement processes.
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Across space. Global allocation of value across geographical boundaries.
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The method of value transfer.
Just as the intrinsic attribute of money (measure of value) and its core function (medium of exchange) remain unchanged—even as money has evolved through shells, tally sticks, cash, deposits, e-money, and stablecoins—the essence of finance similarly remains constant. What we must consider is how to provide better financial services in a distributed, digital environment that transcends time and space.
2.2 The new financial infrastructure
Compared to traditional finance, the greatest innovation of new finance lies in the change of accounting methods—the transparent, public global ledger known as blockchain. Humanity has witnessed only three major shifts in accounting methods over thousands of years, each profoundly shaping economic forms and social structures, reflecting the co-evolution of technology and civilization.
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Single-entry bookkeeping during the Sumerian era (3500 BC) enabled humans to transcend oral communication limits, promoting early trade and state formation due to the need to record taxes and commerce. Commercial dispute clauses appeared even in the ancient Babylonian Code of Hammurabi.
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Double-entry bookkeeping fueled the commercial revolution during the Renaissance (14th–15th centuries). The flourishing trade of Mediterranean city-states, Genoese maritime investments, and Medici family's transnational banking demanded complex financial tools, leading to the emergence of banks and multinational corporations, and establishing commercial credit.
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Then came the one we know well: distributed ledger technology driven by Bitcoin in 2009, catalyzing decentralized finance, transforming trust mechanisms, and giving rise to digital currencies.
This new finance rooted in a transformation of distributed accounting is inherently inseparable from blockchain, smart contracts, digital wallets, and programmable money. Blockchain, serving as the settlement layer of financial infrastructure, was originally designed to solve the problem of final consistency in payment clearing. When digital currencies built on distributed ledgers are combined with smart contracts, they unlock infinite possibilities for new finance: near-instant settlement, 24/7 availability, low-cost transactions, and the inherent programmability, interoperability, and composability of digital tokens with DeFi.
Thus, new finance primarily exhibits three major changes:
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Accounting shifts from centralized double-entry systems to decentralized distributed ledgers;
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Accounts transition from bank accounts to digital wallets;
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Units of account evolve from fiat currencies to digital currencies.
The most crucial development—distributed ledger technology—emerges precisely due to its digital characteristics enabling跨越time, space, and organizational boundaries.
2.3 A monumental shift in financial infrastructure
Therefore, regardless of the form of digital currencies—stablecoins, deposit tokens, CBDCs—the blockchain-based financial infrastructure has undergone earth-shaking changes.
What seeds are being planted here?
The uniqueness of digital currencies lies in their position at the intersection of three massive markets: payments, lending, and capital markets—not to mention their potential role as value channels in a future AI-driven silicon civilization.
Despite geopolitical forces driving waves of deglobalization, we are still being pulled together by blockchain's unified ledger. You’ll realize the world truly is flat. As that book said: "We wanted transoceanic flights, but ended up inventing Zoom."
3. Final thoughts
The key phrases—"policy documents remain effective" and "dynamically assess the development of overseas stablecoins"—still guide our direction. Even though the reality of stablecoins in 2025 may seem surreal, like "you’re in the Red Chamber, I’m on the Journey to the West."
"I’m on the Journey to the West"—means leaving, practicing, persisting through eighty-one trials, pursuing the ambition to explore next-generation financial infrastructure.
In 2008, Modern Sky released a music compilation titled "You Are in the Red Chamber, I Am on the Journey to the West," inspired by Dream of the Red Chamber and Journey to the West, reinterpreting classic tracks into a cultural dialogue between classical and modern, East and West, dream and reality.
You follow your old dreams in the mortal world; I embark on my long journey across ten thousand miles.
But in the end, we may all arrive at the same destination.
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