The Chinese government has officially expressed its stance on stablecoins, marking the end of the gray fantasy era for StableCoin.

For the first time, Chinese regulators explicitly define stablecoins as a form of virtual currency in official documents and include them in the regulatory framework for illegal financial activities. All the ambiguity, speculation, and fluke space surrounding stablecoins in the past few years has since disappeared. This article is from the Mankiw Blockchain Legal Services article and was compiled, compiled and written by Techflow. (Synopsis: The People's Bank of China announced a joint action to “crack down on cryptocurrency trading speculation”: stablecoins and other illegal financial activities) (Background supplement: $4.6 billion of stablecoin trading volume “flooded South Africa”, the central bank is anxious: become a financial system risk, monetary rand sovereignty is challenged) The industry no longer needs to repeatedly test around the “gray possibility”. This is a meeting on the 28th, which is far more important than the news headline itself. The Ministry of Public Security, the Cyberspace Administration of China, the Central Financial Office, the two supremes, the State Administration of Foreign Exchange, the China Securities Regulatory Commission, the State Administration of Financial Supervision, and other “national-level supervision teams” are all in place, which itself shows that the regulators believe that the virtual currency issue has reached a stage where it is necessary to unify the voice and action again. But what is really worth discussing is the key phrase that emerged from the conference - “stablecoins are a form of virtual currency.” For the first time, Chinese officials have explicitly defined stablecoins in official documents and directly included them in the regulatory framework of “illegal financial activities of virtual currencies.” All the ambiguity, speculation, and fluke space surrounding stablecoins in the past few years will disappear from today. The fuzzy space of the past has been completely closed In the past, the industry has always believed that although China's regulatory attitude towards virtual currencies is clear, there is always a “gap in expression” whether stablecoins belong to them. Many entrepreneurs understand this gap as “there may be space for discussion”, and therefore repeatedly test the directions of “cross-border payment”, “supply chain financial settlement”, “foreign trade payment”, “on-chain RMB” and “blockchain pilot”. But the appearance of today's sentence is equivalent to the supervision standing in front of the stage, drawing that blurred boundary into a solid line. Since stablecoins are included in the category of virtual currencies, they automatically apply to the previous regulatory policies on virtual currencies, and there are no exceptions and no pilots. Regulatory logic is not a technical perspective The most common misunderstanding in the industry is to speculate on regulatory logic from a technical perspective. It is believed that as long as the technology is advanced, the security is improved, and the underlying assets are transparent, policy space may be obtained. But the logic of regulation this time is straightforward: the real risks of stablecoins far outweigh their technical value. Three things were repeatedly emphasized in the press release of the meeting - money laundering, fraud, and cross-border capital flows. These three are the complete link of all virtual currency-related cases in the past three years. Whether it is running scores, online gambling, fraudulent capital chains, or underground money banks and illegal foreign exchange exchanges, stablecoins have become the most core settlement layer. It solves the most needed elements of gray business such as “fast, cross-border and difficult to trace”, and naturally becomes the starting point for risks in the eyes of regulators. As long as this risk link is not addressed, there is no point in discussing the commercial value of stablecoins. The priority of supervision has always been “risk first, innovation is second”, and stablecoins cannot meet the requirements of KYC, AML, and supervision under capital under the current realistic conditions, which determines that it will not have a policy window. China and overseas regulatory logic are completely different Many people in the industry understand the regulatory logic of the mainland and Hong Kong, Singapore and the United States in the same framework, and believe that what is being done overseas will be discussed in China sooner or later; But this meeting has already given the only correct way to judge: China will not use the “same path” to discuss stablecoins, and China's regulatory goal has never been to “make the market more efficient”, but to “make the risk more controllable”. After this point is clearly determined, all the so-called “niche innovation”, “small-scale pilots”, “regulatory sandboxes” and “on-chain RMB” have lost their realistic basis. The regulatory attitude is not “strict”, but “direct termination possibility”. Many startup teams have been asking the same question for the past few years: Can we just do on-chain technology? Can you only do system research and development without reaching users? Can the overseas entity be responsible for the distribution and the domestic team be responsible for the technology? Is it possible to explore cross-border financial pilots in the free trade zone? These problems do not need to be explained from today onwards. Because as long as stablecoins are defined as virtual currencies, they fall directly into the general framework of “virtual currency-related activities are illegal financial activities”. As long as a link in your business chain is connected to mainland China - users, funds, servers, promotion, settlement, technical services, matchmaking, agency issuance - the risk level is the same, there is no “technology company is fine” or “only service B side is legal”. The legal nature of stablecoins no longer allows for this distinction. Regulation moves from ambiguity to clear attitude Today's signal is very clear, regulation has moved from “remain vague” to “clear attitude”. Ambiguity used to be a sort of regulation, but stablecoins are no longer suitable for continued ambiguity and are already a “key element” in many cross-border criminal links. As long as the social risks of this matter far outweigh its economic value, regulation will not give any room to experiment. For Chinese entrepreneurs, as long as they want to make stablecoins, there is only one path: the project must be a thorough overseas project. The most crucial thing for overseas legal entities, overseas bank accounts, overseas audits, overseas users, and overseas regulatory licenses is that they cannot provide any form of service to Chinese users, nor can they reach Chinese funds on the business link. As soon as a link falls back into China, the project automatically falls under the designation of “illegal financial activity.” This is a very clear red line. You will see that Hong Kong, Singapore, the Middle East, and Europe are constantly introducing stablecoin regulatory frameworks, and these regions have completely different regulatory goals: they want to use stablecoins to enhance the international competitiveness of local finance; Mainland China's goal is to ensure capital account management capabilities and financial security. The path is naturally different depending on the goal. Characterization is bad news, but also good news For mainland entrepreneurs, this characterization is not a “total ban”, but a complete telling you: stop wasting time in the direction of impossible landing, and invest energy in overseas markets. It means that the mainland's stablecoin illusion is over, and it also means that the industry no longer needs to repeatedly test around the “gray possibility”. For entrepreneurs, this is bad news because the direction is turned off; But this is also good news because the judgment becomes clear and there is no need to continue consuming time in the wrong direction. The regulator has made it clear, and the next thing to judge is the industry itself. Related Stories The Cruel Truth About DeFi: Stablecoin Earnings Collapse, Welcome to the Era of Risk Sun Justin announces the complete closure of stablecoin USDJ: more than 95% has been recovered at a premium Understanding the future of the “dual-track system” of the yen stablecoin: JPYC's DeFi faction and the institutional faction of the United Stablecoin (China's official position on stablecoins for the first time, the gray fantasy era of StableCoin is over) This article was first published in the dynamic area BlockTempo The most influential blockchain news media.