I just saw the central bank's big regulatory move and I literally jumped out of my chair! Stablecoins have been officially classified as a type of virtual currency, and this news hit the crypto space like a bomb. Many friends rushed to ask me, 'Will my U become invalid?' 'Should I sell it quickly?' Don't panic just yet; today’s article will clarify this matter for you, informing you which pitfalls to avoid immediately and how the market is likely to move next. My viewpoint is very clear: this wave is not the end of the world; it's a screening process that will weed out the junk projects!
First, let me summarize for friends who don't understand the news: At the end of November, the central bank held a significant meeting, formally defining stablecoins as a type of virtual currency for the first time. It also emphasized that they cannot meet identity verification and anti-money laundering requirements, making them susceptible to money laundering, fraud, and illegal fund transfers. Some might think, 'Isn't this just stating the obvious?' But you should know that this is the first time regulators have made such a definitive statement. Previously, some people fantasized that stablecoins could 'turn positive,' but that's completely off the table now. Moreover, this time it was a joint effort from multiple departments, including the Ministry of Public Security, the Cyberspace Administration, and the China Securities Regulatory Commission. This level of enforcement is not to be taken lightly.
Here comes the key point, a guide to avoid pitfalls: don't step into these 3 traps! The first pitfall: don't touch those small stablecoins without backing. Besides the few mainstream stablecoins, there are many small stablecoins claiming to be 'pegged to the US dollar' or 'pegged to gold', many of which are shells without real asset backing. Once regulation tightens, these coins are likely to collectively crash; just yesterday, an unknown stablecoin dropped by 20%, which is a signal. My advice is, if you have small stablecoins, exchange them for mainstream ones tonight, don't hold onto them with a lucky mindset.
The second pitfall: beware of the 'compliant stablecoin' scam from the mainland. There will definitely be scammers taking advantage of the regulatory wind to create a so-called 'central bank certified stablecoin' to defraud people, claiming 'it can be used in the mainland, it's legal and compliant.' Remember, the central bank has clearly stated that all virtual currency-related activities are illegal financial activities, and there are no 'compliant stablecoins'. If anyone asks you to buy such coins, blacklist them immediately, don't hesitate. The third pitfall: don't participate in cross-border stablecoin arbitrage. Some so-called 'teachers' will take you to do 'buying USDT in the mainland, selling USDT abroad' arbitrage, claiming you can profit from price differences. Now that regulation is focusing on cross-border capital flows, such operations may be deemed illegal, and by then, you won't make any money, your account may also get banned, which is not worth the loss.
Let's talk about the market trends, which is what you all care about the most. Many people say, 'Regulation is coming, the market is going to crash,' but I don't see it that way. In the short term, there will definitely be panic selling, especially for small coins, which will drop with the sentiment of stablecoins. Bitcoin and Ethereum may fluctuate around $80,000 and $3,000, respectively, which is a normal emotional release. But in the long term, this is definitely a good thing! Regulation points out the risks of stablecoins, which is actually purifying the market, clearing out those garbage projects that want to profit from stablecoin holders, leaving behind the quality projects that will be safer. Moreover, Hong Kong has a formal licensing system for stablecoins, and future funds will be more concentrated in compliant projects, making the market healthier.
My personal trading advice is: don't try to catch the bottom in the short term; wait until the fluctuations are over, about 1-2 weeks later before reassessing; don't rush to sell your mainstream coins, just hold onto quality assets; especially for small coins that are pegged to stablecoins, clear them out quickly. Remember, the core of making money in the crypto space is to survive, not to make chaotic trades in panic.
Lastly, let me say something from the heart: regulation is never meant to kill the entire market, but to make it more orderly. Those who hope for relaxed regulation every day are either scammers wanting to profit from others or inexperienced newbies who haven't lost money yet. Follow me @链上标哥 so you won't get lost!
