Themed compilation: "Policy Interpretation of Virtual Money and Stablecoin under the New Regulations of Thirteen Departments:"

In order for the brothers to quickly understand, the following ten questions and answers on policy interpretation have been organized around key dimensions such as core policy points, regulatory logic, and industry impact.

1 Question: What is the core definition of stablecoin in the new regulations from thirteen departments in 2025?

Answer: Compared to the regulatory meeting in 2021, this time four new participating units were added: the Central Financial Office, the National Development and Reform Commission, the Ministry of Justice, and the National Financial Regulatory Administration, effectively adding three core departments.

The inclusion of the Central Financial Office is of great significance, as it is affiliated with the Central Financial Committee. This marks the elevation of virtual money regulation from departmental coordination to top-level planning, indicating that the risks of virtual money have been incorporated into the core scope of national financial security, and the subsequent enforcement coordination efforts will be significantly strengthened.

Question 2: Compared to previous regulations, what changes have been made to the participating departments this time, and what signals have been released?

Answer: The regulatory scope achieves full lifecycle coverage, encompassing all aspects of Virtual Money and stablecoin issuance, trading, custody, settlement, marketing, and promotion. The core standard for determining illegality is "domestic relevance"; as long as the business has any connection to the domestic market, such as users being within the country, servers located domestically, funds originating domestically, or technical teams based within the country, it is considered illegal financial activity.

Question 3: Under the new regulations, what aspects of the regulation of Virtual Money and stablecoins are covered, and what are the key criteria for determining violations?

A: The new regulations emphasize that stablecoins currently cannot effectively meet customer identification, anti-money laundering, and other requirements. There are three core risks, namely money laundering risk, fundraising fraud risk, and illegal cross-border fund transfer risk. In practice, stablecoins have become the core settlement tool for many "score running platforms" and "cross-border gambling" cases, while their cross-border circulation characteristics are often used to evade foreign exchange controls.

4 Questions: What are the core risks associated with stablecoins as indicated by the new regulations?

Answer: The only way out is to completely go overseas and have no connection with the domestic market. According to legal experts' interpretations, four "fully overseas" requirements must be met: the entity must be fully overseas (the company is registered abroad with no domestic branches), the users must be fully overseas (no services provided to domestic users), the funds must be fully overseas (accounts, reserve funds custody, etc. must all be overseas), and operations must be fully overseas (servers and teams must all be abroad, without using domestic network resources).

Question 5: What are the solutions provided by the new regulations for practitioners engaged in Virtual Money and stablecoin businesses? What core requirements must be met?

Answer: The core comes from three major practical needs. First, to maintain monetary sovereignty, as Virtual Money (especially stablecoins) have a substitute relationship with fiat currency, and monetary sovereignty is the core of a country's financial stability. The promotion of the digital yuan also forms a substitute with stablecoins. Second, to prevent systemic risks, as Virtual Money may transmit risks through financial and social channels, and stablecoins also face the risk of runs caused by non-transparent reserves. Third, to uphold the bottom line of capital controls, the borderless nature of Virtual Money will impact foreign exchange management, with related cases of illegal fund transfers increasing by 40% year-on-year in 2023 - 2024, involving amounts exceeding 50 billion yuan.

6 Questions: Why do the new regulations emphasize "strict rather than lenient" on Virtual Money, and what is the deeper logic behind it?

Answer: Non-compliant. The new regulatory scope covers the entire chain of businesses related to Virtual Money. Even if one only provides technical services for the underlying development of stablecoin, it is still included in the regulatory prohibited areas. Previously, some technical teams tried to evade regulation by only providing technology without participating in operations, but this gray area has been completely closed off under the new regulations.

Question 7: Is it compliant to only provide stablecoin underlying technology development without participating in operations under the new regulations?

Answer: There will likely be three types of supporting documents in the future. First, there may be documents related to criminal cases involving virtual money issued in the form of meeting minutes, although the core difficulty will be the valuation of virtual digital currency; second, legal documents concerning the disposal of virtual money are currently being researched long-term by the two high courts, and the likelihood of issuance is extremely high; third, the Ministry of Justice may introduce relevant legal policies to improve the legal basis for the classification and sentencing in virtual money cases.

8 Questions: After the new regulations are implemented, what supporting laws or policy documents may be introduced in the future?

Answer: Although personal private trading of stablecoins is not directly prohibited, providing trading mediation for others, promoting stablecoins, and similar activities may be deemed illegal financial activities. It should also be made clear that contracts for Virtual Money transactions are not protected by law, and any losses incurred from participating in trading must be borne by the individual, with the associated risks further escalating compared to the past.

9 Questions: What risk warnings do the new regulations pose for individuals participating in Virtual Money and stablecoin related activities?

Answer: Although personal private trading of stablecoins is not directly prohibited, providing trading intermediaries for others, promoting stablecoins, and other such activities may be deemed illegal financial activities. It should also be noted that virtual money trading contracts are not protected by law, and any losses incurred from participating in trades must be borne by the individual, with related risks further escalating compared to the past.

10 Question: Is it illegal for individuals to trade coins? Is it illegal for individuals to sell? Why are some people arrested as soon as they trade?

Answer: Make it clear to your brother, buying and selling Virtual Money is not illegal. The national policy is very clear: Virtual Money is not legal tender, and it is neither encouraged nor protected.

Ordinary players buy and sell normally; even if they accidentally receive tainted money, as long as they are not aware of it, it is not considered a crime.

But why are there still people getting caught? Here are three common situations for you brothers to refer to:

1/ The trading price is abnormal, for example, the market price is 7.2, and you sell in large quantities at 6.7 or 6.8, or buy at a high price of 7.5, the price is obviously abnormal;

2/Help others withdraw cash, the other party asks you to buy Virtual Money and take out the RMB after the exchange, and also charges a so-called "loss fee";

3/ It’s not just simple investment, but rather "arbitrage" — whether it’s over-the-counter trading or operational personnel within the platform, the nature changes. Just think about it, if making money was that easy, you would have become a financial capitalist already, why would you still be doing arbitrage?

In short: individual players engaging in minor trades, normal buying and selling is manageable risk; however, once you cross the line and treat this as a business, the legal risks can be much greater than the market risks.