At the end of November 2025, the People's Bank of China held a meeting of the coordination mechanism for combating speculation in virtual currency transactions, explicitly categorizing stablecoins as part of virtual currencies for the first time and incorporating them into the regulatory framework for illegal financial activities, triggering a strong market reaction. Subsequently, seven industry associations jointly issued a risk warning, reiterating that virtual currencies are not allowed to circulate or be used domestically, once again highlighting China's zero-tolerance policy towards virtual currencies. From Bitcoin to stablecoins, why does China consistently maintain a ban on activities related to virtual currencies? This is based on multiple considerations regarding financial security, social stability, and overall development, and recent regulatory actions further emphasize the coherence and foresight of the policy.
The core risk of virtual currencies lies in their systemic impact on the financial system. Unlike legal tender, virtual currencies lack sovereign credit support and experience extreme price volatility. In October 2025, the price of Bitcoin soared to $126,000, only to plummet to $82,000 just a month later, triggering massive liquidations across the network. Even more alarming are stablecoins, which claim to be 'value pegged' virtual currencies. Their transparency and adequacy of reserves have long been questionable, yet they have become a new vehicle for speculative trading due to their 'relatively stable' characteristics. Currently, the circulation scale of USDT has surpassed $184 billion, forming a potential financial bubble. The decentralized nature of virtual currencies allows them to escape traditional financial regulatory systems, and their 24/7 borderless circulation makes them tools for illegal cross-border fund transfers and evading foreign exchange controls, directly threatening national financial sovereignty.
The proliferation of illegal activities has made virtual currencies a 'gray area' in social governance. The anonymity characteristic of virtual currency transactions makes them an 'ideal tool' for money laundering, fundraising fraud, pyramid schemes, and other criminal behaviors. In the first ten months of 2025, 47 cases of fraud related to stablecoins have been investigated nationwide, with the amount involved reaching 5.6 billion yuan. In a recent trial of the 'CRD' virtual currency pyramid scheme case in the Suqian Economic Development Zone of Jiangsu Province, the organizer used high returns as bait to develop downlines through a 'head-hunting' model, ultimately being sentenced to 5 years in prison. Such cases are a typical portrayal of how virtual currencies have become tools for fraud. According to United Nations data, the amount laundered globally through cryptocurrencies exceeded $100 billion in 2022, while the complexity of the virtual currency transaction chain makes it extremely difficult for the police to trace origins, severely challenging law enforcement capabilities.
In addition, virtual currencies are in serious contradiction with China's development philosophy and policy orientation. The 'mining' activities of virtual currencies like Bitcoin consume massive amounts of electricity, with a single mining machine consuming over five times the monthly electricity of an average household. The global annual electricity consumption for mining once reached 149.37 billion kWh, which goes against China's 'dual carbon' goals. At the same time, the speculative nature of virtual currencies has given rise to the fantasy of 'getting rich overnight,' leading many investors to blindly follow the trend and even invest all their savings, ultimately resulting in total loss. This not only violates the economic policy of 'shifting from virtual to real' but also easily triggers social conflicts. In contrast, the digital renminbi, which China is vigorously promoting, retains the convenience of digital currency while ensuring the safety and regulatory controllability of legal tender. It has been piloted in multiple scenarios and has become a positive alternative to virtual currencies.
Since 2013, when Bitcoin was clearly defined as a 'specific virtual commodity,' to 2021, when virtual currency-related activities were designated as illegal financial activities, and to 2025, when stablecoins were included in strict regulation, China's regulatory policies have continuously evolved along the logic of 'preventing risks and safeguarding people's livelihoods.' This regulatory intensification is not a temporary measure but a necessary response to new risks in the virtual currency sector. As new concepts like stablecoins and tokenization of real-world assets emerge, regulation must take the initiative to fill the regulatory gaps.
Currently, global regulation of virtual currencies shows a differentiated trend, but China's strict prohibition policy is a rational choice based on the characteristics and development stage of its financial system. Virtual currency is not 'digital gold,' but a risk trap wrapped in a technological cloak. The continuous tightening of regulation is aimed not only at building a 'firewall' for financial security but also at guiding market resources toward the real economy and legitimate innovation fields. For ordinary investors, recognizing the illegal nature and risk attributes of virtual currencies and avoiding relevant trading speculation is the correct way to safeguard their property. In the era of digital economy, truly valuable innovations must be based on compliance and safety, which is the core signal conveyed by China's virtual currency regulatory policy.
