Original Author: Xiao Za Legal Team

Original Source: Xiao Za lawyer

On November 28, 2025, the People's Bank of China, in conjunction with more than a dozen departments, held a coordination meeting to combat the speculation of virtual currency trading (hereinafter referred to as the 1128 meeting), emphasizing the need to continue adhering to the relevant provisions of the 2021 "Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading Speculation" (hereinafter referred to as the 9.24 notice), implementing a prohibitive policy on the operational business of virtual currencies in mainland China, and particularly highlighting the need to combat behaviors that use virtual currencies for money laundering and illegal capital outflows.

Overall, the 1128 meeting is a reiteration of old themes. Even self-media in the cryptocurrency space, which desperately tries to ride the wave of hot topics, could only extract the phrase "stablecoins are also a type of virtual currency" from the sparse information flow to create content. However, this raises significant questions: As early as the 9.24 notice in 2021, the central bank had already clarified that "Tether" is a type of virtual currency. Although the term "stablecoin" was not used, there has never been any dispute or misunderstanding among market participants regarding "the inability to operate stablecoin-related businesses in mainland China."

So, what is the focus of the 1128 meeting? What real impact will it have on the industry? Today, the Xiao Za team will briefly discuss this with our partners.

1. What is the focus of the 1128 meeting?

First, let's mention a strange phenomenon: when the 9.24 notice was first released in 2021, the leading virtual currency, BTC, plummeted, and the cryptocurrency space was filled with despair. While various exchanges were still contacting lawyers for consultations, they were also arranging emergency business operations abroad. However, after the 1128 meeting, BTC's overall price did not even make a ripple, indicating its limited impact…

The reason the 1128 meeting did not attract enough attention is that, on one hand, it introduced few new elements, and on the other hand, the information released to the public was limited and somewhat vague, making it difficult for those not long-term industry participants to grasp the true purpose of the meeting.

The Xiao Za team believes that the focus of the 1128 meeting has two main points: (1) A "correction" in the direction of judicial rulings; (2) Strictly limiting the illegal exchange of currencies using stablecoins.

(1) A "correction" in the direction of judicial rulings

The Xiao Za team has previously analyzed that with the expansion of the virtual currency market and the increasing number of related transactions, various civil disputes have become more frequent, leading more and more people to seek judicial relief in courts for civil disputes related to virtual currencies.

In this changing backdrop, Chinese courts have gradually gone through two stages:

(1) 2021-2022, early implementation of the 9.24 notice. Chinese courts uniformly ruled that legal actions involving virtual currencies were invalid (including exchanges, trading, custody, investment involving virtual currencies, as well as related marginal legal actions such as the sale of mining machines and custody contracts), requiring all parties to bear their own risks and not supporting the return of contract funds.

(2) From 2023 to now. With the increase in relevant judicial practices, Chinese courts have deepened their understanding of virtual currencies, and many scholars and participants in judicial practice have begun to question and criticize the previous "one-size-fits-all" approach. The main reason is that, with many mainstream public chains abandoning PoW technology, virtual currency mining is no longer as energy-intensive and environmentally damaging as before. Many judgments have seen the so-called "violation of public order and good customs" viewpoint waver. This has led to some courts gradually forming a non-uniform ruling rule when handling disputes involving virtual currencies: continuing to confirm the invalidity of contracts but no longer requiring all parties to bear their own risks uniformly. Particularly for contracts involving transactions in legal tender, judges are likely to rule for the return of a certain proportion of the legal currency already paid. At the same time, courts will actively promote pre-litigation and in-litigation settlements between the parties rather than issuing direct judgments.

The Xiao Za team believes that one important purpose of this meeting is to correct the direction of judicial rulings.

First, a week before the meeting, the Xiao Za team received a call from a judge regarding a recently concluded retrial appeal case involving virtual currency investment disputes (the case was won, and the Henan Provincial High Court rejected the retrial application). The judge informed us that the Supreme People's Court is paying great attention to such cases and is conducting research, and then engaged in in-depth communication with us about the details of the case and listened to our opinions.

Secondly, at the end of November, the Supreme People's Court released the 36th batch of six guiding cases related to judicial review of arbitration, specifically reissuing guiding case No. 199: Gao Zheyu vs. Shenzhen Yunsi Road Innovation Development Fund Company, Li Bin's application to revoke the arbitration award (this is actually an old case that was publicly released once in 2022). Those familiar with China's judicial system have heard the saying: "Thousands of rulings are hard to revoke." Given the special form and legal status of arbitration, courts generally respect arbitration rulings, and unless there are extremely limited situations that warrant revocation, courts typically recognize arbitration awards.

Thus, the focus of the meeting can be glimpsed through these developments.

(2) Strictly limiting the illegal exchange of currencies using stablecoins

This issue is a real problem that regulatory agencies must face. As is well known, China has a relatively strict foreign exchange control system, generally allowing individuals to exchange no more than $50,000 in foreign currency per year.

In the past, individuals with significant capital outflow needs (for example, children studying abroad incurring substantial expenses) had to enlist the help of relatives to "pool quotas." However, with the gradual expansion of the stablecoin market, increasing application scenarios, and a growing number of cryptocurrency businesses, many capital outflow needs have been addressed by stablecoins like USDT and USDC.

Moreover, there are those who can use stablecoins to facilitate money laundering or concealment of criminal proceeds, and further, the Xiao Za team has encountered bold foreign trade merchants in judicial practice who used USDT and USDC to circumvent United Nations sanctions, assisting sanctioned countries in foreign trade.

Therefore, the 1128 meeting aims to regulate these serious violations that disrupt financial order.

From a judicial practice perspective, in the past year or two, the Xiao Za team has clearly felt that China's judicial authorities have gradually increased their regulatory efforts on cryptocurrency businesses, with many being convicted and punished for illegal business operations, aiding and abetting crimes, money laundering, and concealing criminal proceeds. Therefore, those engaged in related amateur activities should exercise caution.

2. Impact of the 1128 meeting on the industry

From the perspective of cryptocurrency prices, the impact of the 1128 meeting on the cryptocurrency space is that there is no impact. But this is not the case. Members of the Xiao Za team have previously noted during their routine industry research that, according to third-party statistical data, the computing power contributed by various major blockchain public chains within China is significantly increasing and recovering to levels prior to the 9.24 notice, and there is a trend of related practitioners returning to mainland China. Some "mining farms" in remote areas are ramping up operations.

This situation is caused by multiple factors. On one hand, as Singapore and Hong Kong impose increasingly strict restrictions on virtual asset operations, relevant regulations have been introduced, significantly increasing the cost of licensed operations and forcing many practitioners to seek alternatives; on the other hand, after the 9.24 notice, China has achieved substantial results in governance, and in recent years, there has been a certain degree of "laxity" and leniency in regulating mining and virtual asset-related industries, leading some practitioners to believe that "the storm has passed"…

The 1128 meeting effectively sends a public signal: China's regulatory policies are still ongoing, and do not harbor any illusions about crossing the line.

However, will the 1128 meeting affect Hong Kong's open policies towards virtual assets? The Xiao Za team believes it will not. Hong Kong and mainland China have gradually formed a basic pattern of openness and restriction regarding virtual assets, with a clear regulatory attitude: It is not that you cannot innovate financially, but you must innovate in the places I designate. Therefore, partners involved in issuing RWA projects or pursuing stablecoin tracks in Hong Kong can proceed with confidence.

In Conclusion

The Xiao Za team believes that there is no need for partners to be overly anxious about the 1128 meeting. Since the implementation of the 9.24 notice, there has indeed been a need to reiterate regulatory policies and clarify regulatory norms, but this does not mean that "China's policy towards virtual assets is shifting" or that "the central bank will severely crack down on virtual currencies" is true alarmism. Partners should not believe in rumors or spread them; compliance in business operations is sufficient.

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