The Paradox of China's Crypto Regulation and Capital Going Global (Part 1)

"The meeting made clear, based on the requirements set out in the 2021 joint notice issued by ten government agencies, that stablecoins are considered a form of virtual currency. At present, they cannot adequately meet requirements for customer identification, anti-money-laundering compliance, or related regulatory standards. They also carry significant risks of being used for money laundering, fraudulent fundraising, and illegal cross-border capital transfers."

"It can be said that, after this point, an almost irreversible reality is taking shape: China and the United States have now fully diverged onto two fundamentally different official paths in the Web3 era. Put simply, American Web3 remains deeply embedded in the traditional Wall Street model of aggressive financialization. Its core is not the ideal of 'decentralization' but the token itself."

China's People's Bank convened a high-level government meeting in November 2025 to reinforce restrictions on virtual-currency trading and speculation. Multiple agencies confirmed that stablecoins are classified as virtual currencies that fail to meet customer identification, anti-money-laundering compliance, and regulatory standards. These assets carry risks of money laundering, fraudulent fundraising, and illegal capital transfers. Stablecoins lack legal tender status, possess no settlement power, and cannot circulate as currency. This decision marks the conclusion of China's twelve-year virtual-currency regulatory history and establishes a decisive divergence between China and the United States in Web3 development, with China rejecting token-based financialization models.

Read at Apaonline