Regulatory "life and death line" delineation: from a tense atmosphere to the truth of a safe boundary

The market has been tense over the past two weeks, with thirteen government departments halting illegal virtual currency activities, seven industry associations issuing rare synchronized risk alerts, and financial institutions launching comprehensive spot checks. It may seem like a catastrophe, but the truth is far more complex than rumors.

This round of regulation is not aimed at “speculating on coins,” but at air coin scams, cross-border money laundering, illegal RWA issuance, and pyramid-style mining. In other words, regulators are distinguishing between “investment behavior” and “financial crime”—as long as you don’t touch the latter, ordinary traders need not panic.

Seven associations in unison: China’s crypto “barrier” fully closed for the first time

This lineup is very special. The Banking Association, Payment and Clearing Association, Securities Association, Fund Industry Association, Futures Association, Internet Finance Association, and Listed Companies Association issued statements simultaneously. The last time they moved together was on September 24, 2021.

After that announcement, over 300 exchanges withdrew from China, and the global hashrate share plummeted from 75% to 2%.

This time, the “encirclement” by regulators is even tighter:

Banking and Payment Sector: Block USDT trading, cross-border transfers, and other capital flows

Securities, Funds, Futures Sector: Ban on tokenized securities, virtual funds, and other financial product innovations

Internet and Platform Sector: Clean up Web3 promotion, trading traffic channels, and flow entry points

Corporate Financing Sector: Ban on listed companies raising funds via tokens in disguised forms

On the data front, in Q3 2025, China’s underground OTC market size was about 50 billion RMB, with the banking system intercepting over 12,000 suspected coin purchase transfers totaling 4.6 billion RMB in a single quarter. This is not just crackdowns—this is systemic capital isolation.

The real focus amid the tense atmosphere: four high-risk areas

Air coins: typical scam tools

Represented by π coins, characterized by lack of real application, centralized issuance, multi-level promotion, and multiple classifications as pyramid schemes. The regulatory goal is clear: crack down on scams, not on holdings.

Stablecoin money laundering: a red line in financial security

The central bank explicitly states: stablecoins are virtual currencies, not legal digital currencies. Cross-border transfers of USDT/USDC suspected of scam funds, bypassing banking regulation systems, have become a regulatory focus. This is unrelated to “crypto investment,” and pertains to financial crime prevention.

“Cloud computing” scams: capital schemes under the guise of mining

China once led the world with 75% of the hashrate, so mining regulation is particularly strict. The current risk is not the mining farms themselves, but illegal fundraising under the banner of “hashrate”—many are fake mining machines, real capital schemes.

RWA ban for the first time: the most severe signal

The risk alert clearly states: “Our country’s financial regulatory authorities have not approved any real-world asset tokenization activities.” Note that it is “not approved,” not “temporarily not approved.”

The logic behind this is clear: the global RWA scale exceeds $30 billion, with JPMorgan, Citi, and Fidelity all working on on-chain bonds and funds. But for China, allowing “property RWA” would open a huge loophole for capital outflows—this is an absolute red line.

From 1998 to 2025: a decade of regulatory context

Why is China’s crypto regulation more resolute than any other country? The history explains.

The shadow of the 1998 Asian financial crisis

Thailand collapsed, Indonesia was turbulent, Korea went bankrupt—hot money destroyed many countries’ monetary systems. Hong Kong only held the peg with HKD 118 billion. This experience made China instinctively wary of cross-border capital shocks.

Early defenses against offshore RMB in 2009

The annual $50,000 USD foreign exchange quota per person was not arbitrary but to prevent chaotic capital outflows during the initial stages of internationalization. Stablecoins + RWA are essentially “off-bank disguised foreign exchange”—touching the core of policy.

Complete timeline from 2013 to 2025

2013: Bitcoin’s dramatic rise and fall, first risk warning; 2014: Mt. Gox collapse; 2017: ICO scams banned outright; 2021: mining ban issued; 2022: LUNA crash; 2024: Bitcoin price volatility; 2025: frequent liquidation events.

Each regulatory move corresponds to industry overheating and scam outbreaks. This time is no different.

Is it bad news or good news? Actually, it’s the final confirmation of the “safety boundary”

The rumors and fears aside, the real policy message boils down to three points:

No air coins—the main tool for scammers, 90% of victims are from this

No pyramid mining and cloud computing—these projects are fundamentally capital schemes

No stablecoin laundering, illegal financing, cross-border asset transfers—these are criminal-level financial crimes

As long as you avoid these three, you are a compliant crypto investor. The market boundary is now clearly drawn:

Speculating on coins is allowed, but capital outflow is not

Investing is allowed, but scams and pump-and-dump schemes are not

Research is allowed, but illegal issuance and financing are not

After this wave of rumors, the rules of the crypto market have finally stabilized. Over the past decade, it was misunderstood as a “total ban,” but in reality, only activities that threaten financial order, harm ordinary people, or cause capital outflows are prohibited.

When boundaries are clearly defined, the market becomes healthier and more orderly. For investors, the only thing to remember is this boundary—everything else can be participated in with confidence.

The true purpose of regulation is: to protect the market, not to destroy it.