On November 28, 2025, the People's Bank of China, together with more than ten departments, convened a coordination meeting on combating virtual currency trading and speculation (hereinafter referred to as the "1128 Meeting"). The meeting emphasized the continued adherence to the relevant provisions of the 2021 "Notice on Further Preventing and Handling Risks of Virtual Currency Trading and Speculation" (hereinafter referred to as the "9.24 Notice"). It stressed the prohibition of commercial virtual currency businesses in mainland my country and specifically addressed the need to combat money laundering and illegal fund transfers using virtual currencies. Overall, the 1128 Meeting was essentially a rehash of old arguments. Even cryptocurrency media outlets, eager to capitalize on the trend, could only find a single sentence in the otherwise lackluster information flow: "Stablecoins are also virtual currencies." This raises serious questions: The People's Bank of China clearly stated in the 2021 "9.24 Notice" that "Tether" is a type of virtual currency. Although the term "stablecoin" was not used, market participants never disputed or misunderstood the statement that "stablecoin-related businesses cannot be operated in mainland China." So, what exactly was the focus of the 1128 meeting? What real impact will it have on the industry? Today, the Sa Jie team will briefly discuss this with our partners. I. What was the focus of the 1128 meeting? Let's start with a strange phenomenon. When the September 24, 2021 notice was first released, the cryptocurrency "leader," BTC, plummeted, causing widespread panic in the crypto world. While exchanges were still consulting with lawyers on one hand, they were also arranging emergency overseas expansion on the other. However, after the 1128 meeting, the overall price of BTC barely made a ripple, demonstrating its limited impact… The reason the 1128 meeting didn't attract enough attention is partly because it offered little new information, and partly because it released little information and its focus was rather vague, making it difficult for those outside the industry to grasp the true purpose of the meeting. The Sa Jie team believes that the 1128 meeting had two key points: (1) a “correction” in the direction of judicial rulings; and (2) strict restrictions on the illegal exchange of foreign currency using stablecoins. (I) A “correction” in the direction of judicial rulings As analyzed in previous articles, with the expansion of the virtual currency market, related transactions have increased, and various civil disputes have occurred frequently. More and more people have resorted to the courts to seek judicial relief for civil disputes related to virtual currencies. Under this background change, Chinese courts have gradually gone through two stages: (1) 2021-2022, the early stage of the implementation of the 9.24 notice. Chinese courts have consistently ruled all cryptocurrency-related legal acts invalid in a "one-size-fits-all" manner (including cryptocurrency exchanges, transactions, custody, and investments, as well as peripheral legal acts related to cryptocurrencies, such as mining machine sales and custody contracts), requiring all parties to bear the risks themselves and not supporting the return of contract payments.
(2) From 2023 to present. With the increase in relevant judicial practice, Chinese courts have gained a deeper understanding of virtual currencies, and many scholars and judicial practitioners have begun to question and criticize the previous "one-size-fits-all" approach. The main reason is that, with the abandonment of PoW technology by many mainstream public chains, cryptocurrency mining is no longer as energy-intensive and environmentally polluting as it used to be, and the so-called "violation of public order and good morals" argument in many judgments has been shaken. As a result, some courts have gradually formed an unwritten rule of judgment when handling cryptocurrency disputes: continue to confirm the invalidity of contracts, but no longer require all parties to bear the risks themselves, especially for some contracts using fiat currency, judges may order the return of a certain percentage of the fiat currency already paid. Meanwhile, the courts will actively facilitate pre-trial and in-trial settlements between the parties in such cases, rather than issuing direct judgments. The Sa Jie team believes that one of the important purposes of this meeting is to correct this trend in judicial rulings. Firstly, a week before the meeting, the Sa Jie team received a call from a judge in a recently concluded appeal case concerning a cryptocurrency investment dispute (the case was won, with the Henan Provincial Higher People's Court rejecting the appeal). The judge informed them that the Supreme People's Court is paying close attention to such cases and is conducting research. The judge then had in-depth discussions with us regarding the details of the case and listened to our opinions. Secondly, at the end of November, the Supreme People's Court released its 36th batch of six guiding cases related to judicial review of arbitration. Among them, Guiding Case No. 199, Gao Zheyu v. Shenzhen Yun Silk Road Innovation Development Fund Enterprise and Li Bin, applying to revoke the arbitration award, was re-released (this is actually an old case, having already been made public in 2022). Those familiar with my country's judicial system have heard the saying: "A thousand rulings are hard to overturn." Given the special form and legal status of arbitration, courts generally respect arbitral awards, and unless there are a very limited number of circumstances requiring their revocation, courts generally recognize them. Thus, the focus of this meeting can be glimpsed from this example. (II) Strictly Restricting Illegal Foreign Exchange Transactions Using Stablecoins This is actually a real and pressing issue that regulatory agencies must confront. As is well known, my country has a relatively strict foreign exchange control system, generally limiting each person to a maximum of US$50,000 per year for foreign exchange transactions. Previously, people with large outbound capital needs (e.g., children studying abroad incurring significant expenses) had to enlist the help of extended family and friends to "draw up" their quotas. Now, with the stablecoin market expanding, its applications broadening, and the number of cryptocurrency traders increasing dramatically, many outbound capital needs have been met by stablecoins like USDT and USDC. Even worse, stablecoins can be used to facilitate money laundering or concealing criminal proceeds for upstream crimes. Furthermore, our team has encountered daring foreign trade merchants in judicial practice who have used USDT and USDC to circumvent UN sanctions resolutions and assist sanctioned countries in their foreign trade. Therefore, what the 1128 meeting truly aims to regulate is this type of behavior that seriously disrupts financial order and crosses the line. From a judicial practice perspective, in the past year or two, the Sa Jie team has clearly felt that the regulatory efforts of my country's judicial authorities against cryptocurrency dealers have gradually increased, with a large number of dealers being convicted and punished for crimes such as illegal business operations, aiding and abetting fraud, money laundering, and concealing the proceeds of crime. Therefore, any partners engaged in related amateur activities should exercise extreme caution. II. The Impact of the 1128 Meeting on the Industry From the perspective of cryptocurrency prices, the 1128 meeting had no impact on the cryptocurrency market. However, this is not the case. During their routine industry research, members of the Sa Jie team noticed that, according to third-party statistics, the computing power contributed by my country to various major blockchain public chains is significantly increasing and recovering to the level before the September 24, 2021 notice. Related practitioners are also showing a trend of returning to the mainland, and some "mining farms" in remote mountainous areas are operating at full capacity. This situation is caused by a combination of factors. Firstly, as Singapore and Hong Kong have tightened restrictions on virtual asset businesses and introduced relevant regulations, the cost of licensed operation has increased significantly, forcing many practitioners to seek alternatives. Secondly, my country has achieved considerable results in its governance since the issuance of the September 24th notice, and in recent years, there has been a certain degree of "laxity" and leniency in the regulation of mining and virtual asset-related industries, leading some practitioners to believe that "the storm has passed"... The November 28th meeting is actually a public signal: my country's regulatory policies are still ongoing, and there is no room for complacency or crossing the line. However, will the November 28th meeting affect Hong Kong's open policy on virtual assets? The Sa Jie team believes not. Hong Kong and the mainland have gradually formed a basic pattern of one opening and one restricting in dealing with virtual assets. The regulatory attitude is clear: it's not that you're not allowed to innovate financially, but you must innovate in the places I designate. Therefore, partners who are launching RWA projects in Hong Kong or pursuing stablecoins can proceed with confidence. In conclusion, the Sa Jie team believes that partners don't need to be overly concerned about the November 28th meeting. While it's true that there's a need to reiterate regulatory policies and clarify regulations since the implementation of the September 24th policy, this absolutely does not mean that alarmist claims such as "my country's policy towards virtual assets has shifted" or "the central bank will severely crack down on virtual currencies" are true. Partners should not believe or spread rumors, and should simply conduct business in compliance with regulations.
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