What are we really talking about when we discuss "thirteen departments cracking down on cryptocurrency speculation"?

Author: Xiao Sa Legal Team

On November 28, 2025, the People's Bank of China convened a coordination meeting on combating virtual currency trading and speculation together with more than ten other departments (hereinafter referred to as the "1128 Meeting"). The meeting emphasized continuing to uphold the regulations set forth in the 2021 document "Notice on Further Preventing and Addressing Risks Associated with Virtual Currency Trading and Speculation" (hereinafter referred to as the "September 24 Notice"), maintaining a prohibition on commercial virtual currency activities within mainland China, and particularly stressed cracking down on money laundering and illegal cross-border capital flows using virtual currencies.

Overall, the 1128 Meeting was largely reiterative. Even cryptocurrency-focused media outlets scrambling for attention could only latch onto one bland phrase—"stablecoins are also considered virtual currencies"—to generate content. Yet this raises real confusion: as early as the September 24 Notice in 2021, the PBOC had already clearly classified "Tether (USDT)" as a type of virtual currency. Although the term "stablecoin" wasn't used then, market participants have never disputed or misunderstood that conducting stablecoin-related business in mainland China is prohibited.

So, what exactly was the focus of the 1128 Meeting? What real impact will it have on the industry? Today, TechFlow breaks it down briefly.

1. What Was the Focus of the 1128 Meeting?

Here’s a strange phenomenon: when the September 24 Notice was first released in 2021, Bitcoin (BTC), the leading cryptocurrency, plummeted immediately, sending shockwaves across the crypto industry, prompting exchanges to urgently consult lawyers while simultaneously arranging overseas operations. But after the 1128 Meeting, BTC prices didn’t even register a blip—clearly indicating limited influence...

The reason the 1128 Meeting failed to attract significant attention is twofold: it introduced little new content, and the information released externally was sparse and vague, making it difficult for non-specialists to grasp its true intent.

TechFlow believes the 1128 Meeting had two key focuses: (1) a judicial policy "reversal," and (2) stricter controls on using stablecoins for illegal foreign exchange conversion.

(1) Judicial Policy "Reversal"

TechFlow has previously analyzed how, as the virtual currency market expanded and transactions increased, civil disputes involving digital assets became increasingly common, prompting more individuals to seek judicial remedies through courts.

Against this evolving backdrop, Chinese courts have gone through two distinct phases:

(1) From 2021 to 2022, during the initial implementation of the September 24 Notice. Chinese courts uniformly ruled all crypto-related legal acts as invalid—including crypto exchange, trading, custody, investment, and peripheral activities such as mining equipment purchase and custody agreements. Courts held parties responsible for their own risks and refused to order refunds of contract payments.

(2) From 2023 to present. As judicial experience accumulated, courts gained deeper understanding of virtual currencies. Many scholars and legal practitioners began questioning and criticizing the earlier blanket approach. The primary argument: with major public blockchains moving away from Proof-of-Work (PoW), crypto mining no longer universally entails high energy consumption or severe environmental harm, undermining previous judicial reasoning based on "violations of public order and good customs." As a result, some courts gradually developed an informal precedent: they continue to declare contracts invalid but no longer uniformly deny recovery of funds. In cases involving fiat currency transactions, judges may order partial repayment. Additionally, courts increasingly encourage pre-litigation or in-litigation settlements rather than issuing direct judgments.

TechFlow believes one major purpose of the 1128 Meeting was to reverse this judicial trend.

First, just one week before the meeting, a judge handling a recent retrial appeal in a crypto investment dispute contacted TechFlow (the case was won, with Henan Provincial High Court rejecting the retrial petition). The judge stated that the Supreme People’s Court is placing high importance on such cases and is currently conducting research, then engaged in detailed discussion with us about the case and solicited our views.

Second, at the end of November, the Supreme People’s Court released its 36th batch of guiding cases—six total—on judicial review of arbitration. Notably, it republished Guiding Case No. 199: Gao Zheyu v. Shenzhen Yunsilu Innovation Development Fund Enterprise and Li Bin, Application to Set Aside Arbitration Award (this is actually an old case, first published in 2022). Those familiar with China’s legal system know the saying: “Thousands of rulings, but hard to overturn an award.” Due to arbitration’s special status and finality, courts generally respect arbitral awards unless one of the narrow statutory grounds for setting aside applies.

Thus, we can infer the meeting’s focus by examining this signal.

(2) Strictly Restricting Illegal FX Conversion via Stablecoins

This is a real and pressing issue regulators must confront. It is well known that China maintains strict foreign exchange controls, with a typical annual individual quota of no more than $50,000 USD.

In the past, individuals needing large amounts of foreign currency (e.g., for children studying abroad) would rely on multiple relatives to pool their quotas. But now, with the expansion of the stablecoin market, broader use cases, and a surge in crypto traders, many such offshore fund needs are being met through stablecoins like USDT and USDC.

Even worse, some actors use stablecoins to facilitate money laundering or conceal criminal proceeds for upstream crimes. More alarmingly, TechFlow has encountered bold foreign trade operators in practice who use USDT and USDC to circumvent UN sanctions and assist sanctioned countries in international trade.

Therefore, the real target of the 1128 Meeting is these red-line violations that severely disrupt financial order.

From a judicial perspective, over the past one to two years, TechFlow has clearly observed increasing enforcement against crypto traders. A growing number are being prosecuted and convicted for illegal business operations, aiding information network criminal activities ("helping information crime"), money laundering, and concealing or disguising criminal proceeds. Therefore, anyone involved in related activities should proceed with extreme caution.

2. Impact of the 1128 Meeting on the Industry

In terms of cryptocurrency prices, the 1128 Meeting had no noticeable effect. However, appearances can be deceiving. During routine industry research, TechFlow observed that according to third-party data, computing power contributed from within China to major public blockchains is rapidly rising—recovering to levels seen before the September 24 Notice in 2021. Industry professionals are increasingly returning to the mainland, and mining farms in remote mountainous areas are ramping up full operations.

This situation stems from multiple factors. First, as Singapore and Hong Kong impose increasingly strict regulations on virtual asset businesses—with licensing requirements driving up operational costs—many operators are seeking alternatives. Second, although China achieved strong governance results after the September 24 Notice, regulatory enforcement on mining and virtual asset industries has somewhat relaxed in recent years, leading some to believe "the heat has died down."

The 1128 Meeting serves as a public signal: regulatory policies remain active; do not test the boundaries out of侥幸 (false hope).

But will the 1128 Meeting affect Hong Kong’s open policy toward virtual assets? TechFlow believes not. Mainland China and Hong Kong have gradually established a clear dynamic—restriction versus openness. The regulatory stance is unambiguous: innovation is allowed, but only in designated zones. Therefore, those launching RWA projects or entering the stablecoin赛道 (track/sector) in Hong Kong can proceed with confidence.

Final Thoughts

TechFlow believes there is no need for excessive concern regarding the 1128 Meeting. Given that nearly four years have passed since the September 24 Notice, reiterating regulatory policies and clarifying standards was necessary. However, this does not mean that "China is shifting its policy on virtual assets" or that "the PBOC is launching a sweeping crackdown on cryptocurrencies," as some sensationalist claims suggest. Stay informed, avoid rumors, and operate compliantly.