When we talk about "Thirteen Departments Cracking Down on Currency Speculation," what are we really discussing?
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When we talk about "Thirteen Departments Cracking Down on Currency Speculation," what are we really discussing?
Partners, do not believe or spread rumors; simply conduct business in compliance with regulations.
Navigating Web3 tides with focused insightsAuthor: Xiao Sa Legal Team
On November 28, 2025, the People's Bank of China, in conjunction with over ten other departments, convened a coordination meeting on combating virtual currency trading speculation (hereinafter referred to as the 1128 Meeting). It reiterated the continued adherence to the relevant provisions of the 2021 "Notice on Further Preventing and Addressing the Risks of Virtual Currency Trading Speculation" (hereinafter referred to as the 9.24 Notice), maintaining a prohibitive policy towards virtual currency business operations within mainland China. It particularly emphasized cracking down on the use of virtual currency for money laundering and illegal capital outflows.
Overall, this 1128 Meeting essentially reiterated existing policies. Even crypto-focused self-media outlets scrambling for attention could only dig out a phrase like "stablecoins also fall under virtual currency" from the sparse information flow to sensationalize. However, this is quite puzzling: as early as the 9.24 Notice in 2021, the central bank had already explicitly stated that "Tether" is a type of virtual currency. Although the term "stablecoin" wasn't used, there has never been any controversy or misunderstanding among relevant market participants regarding the prohibition of stablecoin-related business operations in mainland China.
So, what exactly is the focus of the 1128 Meeting? What real impact will it have on the industry? Today, our team will briefly discuss this with our partners.
I. What is the Focus of the 1128 Meeting?
First, let's mention a strange phenomenon. When the 9.24 Notice was first issued in 2021, the price of BTC, the "big boss" of cryptocurrencies, plummeted, causing widespread distress in the crypto community. While various exchanges were consulting lawyers on one hand, they were already making emergency plans to move operations overseas on the other. However, after this 1128 Meeting concluded, the overall price of BTC didn't even show a ripple, indicating its limited impact...
The reason the 1128 Meeting hasn't garnered sufficient attention is partly due to its lack of new substance and partly because the information released externally is limited and its focus somewhat vague, making it difficult for non-long-term industry insiders to grasp its true purpose.
Our team believes the 1128 Meeting has two key focuses: (1) A "correction" in judicial adjudication trends; and (2) Strictly restricting the use of stablecoins for illegal foreign exchange activities.
(1) "Correction" in Judicial Adjudication Trends
As analyzed in our previous articles, with the expansion of the virtual currency market, related transactions have increased, leading to frequent civil disputes. More and more people are resorting to courts for judicial relief in virtual currency-related civil disputes.
Against this backdrop of changing circumstances, Chinese courts have gradually gone through two phases:
(1) 2021-2022, the early period after the issuance and implementation of the 9.24 Notice. Chinese courts uniformly invalidated all cryptocurrency-related legal acts (including cryptocurrency exchange, trading, custody, investment, as well as peripheral legal acts related to cryptocurrencies, such as mining machine sales and custody contracts, etc.), requiring parties to bear their own risks and not supporting claims for contract refunds.
(2) 2023 to present. With the increase in relevant judicial practice, Chinese courts have gained a deeper understanding of virtual currencies. A significant number of scholars and participants in judicial practice have begun to question and criticize the previous "one-size-fits-all" approach. The main argument is that as major public blockchains abandon PoW technology, virtual currency mining is no longer as universally energy-intensive and environmentally polluting as before. This has shaken the rationale of "violating public order and good morals" cited in many judgments. Consequently, some courts have gradually formed an unwritten adjudication rule when handling cryptocurrency-related disputes: continue to confirm the invalidity of contracts, but no longer uniformly require parties to bear their own risks. Especially for contracts involving fiat currency transactions, judges are more likely to order the return of a certain proportion of the paid fiat currency. Simultaneously, courts actively promote pre-litigation and in-court settlements for such cases rather than issuing direct judgments.
Our team believes that one important purpose of this meeting is to correct this judicial trend.
First, a week before the meeting, our team received a call from a judge regarding a recently concluded retrial appeal case involving a cryptocurrency investment dispute (we won the case; the Henan Provincial High People's Court rejected the retrial application). The judge informed us that the Supreme People's Court is paying great attention to such cases and is currently conducting research. Subsequently, the judge engaged in in-depth communication with us about the details of the case and listened to our opinions.
Second, at the end of November, the Supreme People's Court released the 36th batch of guiding cases, comprising six cases related to judicial review of arbitration. It specifically republished Guiding Case No. 199: Gao Zheyu v. Shenzhen Yunsi Road Innovation Development Fund Enterprise and Li Bin, Application for Revocation of Arbitration Award (this is actually an old case that was already made public once in 2022). Those familiar with China's judicial system have heard the saying: "It's easier to get an arbitration award than to get it revoked." Given the special nature and legal status of arbitration, courts generally respect arbitration awards. Unless there are extremely limited grounds for revocation, courts usually uphold arbitration awards.
Thus, the focus of this meeting can be glimpsed from these developments.
(2) Strictly Restricting the Use of Stablecoins for Illegal Foreign Exchange Activities
This is actually a real and practical issue that regulatory authorities must address. As is well known, China has a relatively strict foreign exchange control system, generally limiting individuals to an annual foreign exchange quota of no more than $50,000.
Previously, individuals with large capital outflow needs (e.g., for children's expensive overseas education) had to enlist the help of numerous relatives to pool their "quotas." Now, with the expanding stablecoin market, increasing application scenarios, and a growing number of cryptocurrency traders, many capital outflow needs are being met through stablecoins like USDT and USDC.
Furthermore, some even use stablecoins to facilitate money laundering or conceal criminal proceeds for upstream crimes. Going a step further, in our judicial practice, our team has encountered bold foreign trade merchants using USDT and USDC to circumvent UN sanctions resolutions, assisting sanctioned countries in foreign trade.
Therefore, what the 1128 Meeting truly aims to regulate is precisely this type of red-line-crossing behavior that severely disrupts financial order.
From a judicial practice perspective, over the past year or two, our team has clearly felt that Chinese judicial authorities have gradually increased regulation of cryptocurrency traders. Many traders have been convicted and punished for crimes such as illegal business operations, assisting information network criminal activities, money laundering, and concealing criminal proceeds. Therefore, partners engaged in related activities must exercise caution.
II. The Impact of the 1128 Meeting on the Industry
Judging by cryptocurrency prices, the impact of the 1128 Meeting on the crypto community is negligible. However, that's not entirely the case. During our daily industry research, our team members noticed that according to third-party statistical data, the computing power contributed from within China to various major blockchain public chains is significantly recovering to levels seen before the issuance of the 9.24 Notice in 2021. Relevant practitioners are also showing a trend of returning to mainland China, and some "mining farms" in remote mountainous areas are operating at full capacity.
This situation is caused by a combination of factors. Firstly, as Singapore and Hong Kong impose increasingly strict regulations on virtual asset operations, with successive regulations being issued, the cost of licensed operations has significantly increased, forcing many practitioners to seek opportunities elsewhere. Secondly, after the issuance of the 9.24 Notice, China achieved considerable success in governance. However, in recent years, there has been a certain degree of "slackness" and laissez-faire attitude towards regulating mining and virtual asset-related industries, leading some practitioners to believe "the storm has passed"...
This 1128 Meeting actually publicly signals that the policies of China's regulatory agencies remain ongoing. Do not harbor侥幸心理 and cross the line.
However, will the 1128 Meeting affect Hong Kong's open policy towards virtual assets? Our team believes it will not. Regarding virtual assets, Hong Kong and mainland China have gradually formed a basic pattern of one being open and the other restrictive. The regulatory attitude is clear: financial innovation is not disallowed, but it must occur within designated areas. Therefore, partners involved in issuing RWA projects or venturing into the stablecoin track in Hong Kong can proceed with confidence.
Final Thoughts
Our team believes that partners need not be overly concerned about the 1128 Meeting. Since the implementation of the 9.24 Notice, there has indeed been a need to reiterate regulatory policies and clarify regulatory norms. However, this absolutely does not mean that rumors such as "China's policy on virtual assets is shifting" or "the central bank is going to crack down hard on virtual currencies" are true. Partners should not believe or spread rumors; simply operate in compliance with regulations.
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