Policy Interpretation: The Central Bank Governor's latest remarks, is China going to continue cracking down on Virtual Money?

Author: Liu Zhengyao

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On October 27, Beijing held the “2025 Financial Street Forum Annual Conference”. The President of the People's Bank of China, Pan Gongsheng, clearly stated at the conference that he would “continue to crack down on the operation and speculation of virtual currencies within the country.” ( See: “The Practice and Future Evolution of China's Macro-Prudential Management System - A Keynote Speech by Pan Gongsheng, President of the People's Bank of China, at the 2025 Financial Street Forum Annual Conference” ). This statement has attracted significant attention in the Chinese cryptocurrency community: on one hand, investors are interpreting it as a signal of renewed regulatory tightening; on the other hand, various cryptocurrencies, including Bitcoin and Ethereum, have shown a clear downward trend in prices since last night (October 27) (although it is still unclear whether there is a direct causal relationship with the President's remarks). Against this backdrop, market sentiment has become cautious, leading to speculation: will mainland China once again initiate a wave of stringent regulation on the “coin circle”? As a lawyer who is constantly monitoring the construction of the Web3 industry, the author will explore this topic in four parts: first, summarize what President Pan said, review the evolution of virtual currency policies in mainland China, analyze potential future regulatory trends, and finally discuss the potential impact on the coin circle. 1. What did the central bank governor specifically say? We won't reiterate the central bank governor's original words here; you can research the official report linked above on your own. We will summarize the following key points:

1. Stablecoins are still in the “early development stage” and currently cannot effectively meet basic regulatory requirements such as “Know Your Customer” (KYC) and “Anti-Money Laundering” (AML); 2. Activities related to virtual currencies, including stablecoins, may amplify the vulnerabilities of the global financial system and impact national monetary sovereignty; 3. The People's Bank of China will collaborate with public security organs, the China Banking and Insurance Regulatory Commission, and other relevant departments to continue a strict crackdown on domestic virtual currency trading, speculation, and operations; 4. The central bank will continue to promote the broader use of the central bank digital currency (i.e., “e-CNY”), indicating that China will focus more on the construction of a state-led digital currency system. It will also further improve the management system of digital renminbi, expand the participation of commercial banks, and establish international operation centers to advance the ecological construction of cross-border and domestic digital renminbi. In summary, President Pan's statements indicate three signals: First, the regulatory authority's strong intolerance towards virtual currency trading, speculation, and domestic operational activities remains firm; Second, regulatory concern over digital assets like “stablecoins” that are pegged to fiat currencies and may circulate across borders is further heightened; Third, China's policy direction in the construction of digital renminbi and the replacement of private crypto assets is becoming clearer. 2. Overview of Virtual Currency Policies in Mainland China To better understand the current regulatory context, we outline the general evolution of virtual currency policies in mainland China in chronological order (detailed content can refer to the “Summary of Regulatory Documents for the Web 3.0 Industry in Mainland China”):

It can be seen that the regulatory logic in mainland China has always been “unchanged intention”. Starting from controlling risks, preventing capital outflow, maintaining financial stability, and protecting monetary sovereignty, it has gradually strengthened the control over crypto assets. At the same time, China does not outright deny “blockchain technology”, but has been formulating different policies for “public chain crypto asset trading” and “state-led digital currency”. However, it should be specifically noted that the central bank governor's speech can only be understood as a statement, reaffirming and insisting on previous policies, and does not indicate that any new regulations have been introduced in the domestic crypto sector. How will China crack down on activities related to the crypto sector? Based on the aforementioned analysis, the author believes that Mainland China is likely to continue and intensify its crackdown on activities related to the cryptocurrency sector in the following areas: (1) Strengthening regulation against domestic trading and speculation platforms. The central bank's statement of “continuing to crack down on domestic virtual currency operations and speculation” indicates that the regulatory authorities are not just looking to maintain the status quo, but may take proactive measures. If platforms use domestic funds and domestic users to participate in cryptocurrency trading through foreign platforms (such as cryptocurrency exchanges and various funds), regulatory authorities may increase investigation and punishment efforts. From past experience, every time Chinese regulatory agencies strengthen their policy statements on the cryptocurrency sector, it leads to short-term fluctuations or even crashes in cryptocurrency prices. Therefore, the signals released by this statement may also prompt market participants to cautiously withdraw or avoid risks. (2) Attention to the risks of stablecoins and cross-border circulation. Stablecoins were specifically mentioned in the central bank governor's speech: it pointed out that they are in an “early development stage” while emphasizing that there are still loopholes in “customer identification” and “anti-money laundering”. For China, stablecoins are not just a financial regulation issue; they also involve monetary sovereignty and cross-border capital flows. Therefore, China may strengthen monitoring and crackdown on stablecoin issuance, overseas dissemination, and situations linked to the Renminbi in the future (especially for the U business community and those using stablecoins for illegal currency exchange, who should pay attention to the criminal legal risks involved). (3) Promoting the digital Renminbi to reinforce the official dominant position. Against the backdrop of emphasizing the crackdown on “virtual currency speculation”, the central bank governor also proposed to accelerate the advancement of the state-led digital Renminbi. From a regulatory perspective, when “official digital currency” and “private crypto assets” are in a competitive or substitutive relationship, the authorities tend to strengthen restrictions on the latter and expand the use of the former. Therefore, if the cryptocurrency sector is seen as a challenge to the national digital currency strategy or the stability of the financial system, the likelihood of it being suppressed will be greater. (4) Departmental collaboration may increase. President Pan mentioned that there will be coordinated efforts with public security and financial regulatory departments to carry out crackdowns. Based on the past policy evolution and the author's practical experience as a Web3 lawyer, this means that future regulation will rely not only on administrative orders or notifications but may also involve collaboration with public security, financial regulatory bodies, market supervision departments, and network regulation, forming a closed-loop crackdown chain. This will likely increase the possibility of the cryptocurrency space shifting from “gray” to “clearly prohibited or high-risk” areas. In summary, from the current data and policy trends, it is highly likely that mainland China will continue and intensify regulatory measures and crackdowns on cryptocurrency-related activities (speculative trading of virtual currencies, exchange channels between virtual currencies and fiat currencies, illegal activities using stablecoins and RWA, etc.). However, the crackdown is more likely to be “targeted + institutionalized” rather than a “comprehensive purge.” Final thoughts: Insights and suggestions for the cryptocurrency space. For the cryptocurrency space (especially the Chinese cryptocurrency community), we offer the following noteworthy insights: 1. The uncertainty of the regulatory environment (which can also be described as the certainty of crackdowns on the cryptocurrency space) is further exacerbated. From policy statements to market price fluctuations, regulatory expectations are often immediately reflected in the market. Investors should be highly vigilant about policy risks, cautiously buying, selling, and investing in virtual currencies and their derivative projects; 2. For domestic participants, relying on domestic users, domestic channels, and domestic trading platforms carries higher risk factors. “Gray” businesses such as stablecoins, cross-border channels, and off-chain transactions will become regulatory focal points. The possibility of project parties facing criminal risks is continuously increasing; 3. From a strategic perspective, China insists on banning the proliferation of private encrypted assets while actively promoting a state-led digital currency system. For those engaged in blockchain infrastructure and compliant digital asset services, there may be increasing opportunities to transition from “darkness” to “light,” moving towards a “legal and compliant” direction. In conclusion, President Pan's speech is not merely a “routine regulatory reminder,” but an important signal in the competitive landscape of “virtual currency vs. national digital currency” within China's digital financial system. Cryptocurrency project parties and ordinary participants should carefully assess and operate cautiously.