BlockBeats News, December 1st, the People’s Bank of China, together with more than ten departments, held a coordination meeting on combating the speculation of virtual currency trading on November 28th (hereinafter referred to as the 1128 Meeting). It emphasized the need to continue to adhere to the relevant provisions of the 2021 “Notice on Further Preventing and Dealing with the Risks of Speculation in Virtual Currency Trading” (hereinafter referred to as the 9.24 Notice), which in mainland China adopts a prohibition policy on the operational business of virtual currency and specifically highlighted the need to combat money laundering and illegal cross-border fund flows using virtual currency.
In response to this policy, Lawyer Xiao Sa interpreted that overall, the 1128 Meeting is a reiteration of previous statements, and what is truly being regulated this time is the illegal foreign exchange using stablecoins, which severely disrupts the financial order. As is well known, China has established a relatively strict foreign exchange control system, where in general, the annual foreign exchange quota per person does not exceed $50,000. Nowadays, as the stablecoin market has gradually expanded, application scenarios have continued to grow, and the number of cryptocurrency exchanges has surged, many cross-border fund outflows have been addressed by stablecoins such as USDT and USDC. Furthermore, some have even been able to use stablecoins to facilitate money laundering or disguise and conceal the proceeds of crime for upstream criminals. Moreover, in judicial practice, there have been bold instances where international traders have used USDT and USDC to circumvent United Nations sanctions and assist sanctioned countries in their foreign trade.
From a judicial practice perspective, in the past one to two years, China’s judicial organs have gradually intensified their regulation of cryptocurrency exchanges, and a large number of cryptocurrency exchanges have been convicted and punished for crimes such as illegal business operations, aiding in fraud, money laundering, and concealing the proceeds of crime.
Furthermore, Lawyer Xiao Sa believes that the 1128 Meeting will not affect Hong Kong’s open policy towards virtual assets in China. Hong Kong and mainland China have gradually formed a basic pattern of one being open while the other restrictive in dealing with virtual assets, with a clear regulatory attitude: It’s not that we won’t allow financial innovation, but you must innovate in the place I designate.
