Written by: Viee, Amelia, Denise, Biteye Content Team

Recently, the seven major financial associations in mainland China issued the latest risk warning, specifically naming various virtual assets such as stablecoins, RWA, and air coins. Currently, although Bitcoin has not shown significant fluctuations, the recent cooling market sentiment, shrinking accounts, and the off-market discount of USDT have reminded people of the scenes during previous rounds of policy tightening.

Since 2013, mainland China's regulation of the cryptocurrency sector has gone through twelve years. Policies have been implemented repeatedly, and the market has responded each time. This article aims to follow the timeline and review the market reactions at these key points, while also clarifying one question: after regulation is implemented, will the crypto market fall silent, or will it gather strength to take off again?

2013: Bitcoin Defined as "Virtual Commodity"

On December 5, 2013, the People's Bank of China and five other ministries jointly issued a notice titled "Notice on Preventing Bitcoin Risks," which clearly defined Bitcoin as a "specific virtual commodity" that does not have legal tender status and is not considered currency. At the same time, it prohibited banks and payment institutions from providing services for Bitcoin transactions.

The timing of this notice was quite subtle, coming just after Bitcoin had reached a historical high of around $1,130 at the end of November. In early December, Bitcoin's price fluctuated between $900 and $1,000, but just a few days after the policy was implemented, the market began to cool rapidly. Throughout December, Bitcoin's closing price fell to about $755, with a monthly decline of nearly 30%.

In the following months, Bitcoin entered a prolonged downward oscillation range, with prices generally between $400 and $600. This decline from the high point essentially marked the end of the 2013 bull market. Bitcoin's price continued to stay below $400 until the end of 2015.

The first round of regulation extinguished the early fervor and opened the curtain on the "policy and market" game.

2017: ICO Ban and "Great Migration" of Exchanges

2017 was an extremely noisy year for the crypto market and also the year of the most decisive regulatory actions. On September 4, seven ministries issued the "Announcement on Preventing Risks of Token Issuance Financing," classifying ICOs as illegal financing and requiring domestic exchanges to shut down completely. On that day, Bitcoin closed at around $4,300. However, a week after the policy was announced, BTC briefly dropped to as low as $3,000.

Although this round of regulation cut off the dominant position of domestic exchanges in the short term, it did not shake the foundation of the global bull market. As trading activities quickly migrated to places like Singapore, Japan, and South Korea, Bitcoin rebounded sharply after a phase of clearing, starting a rise in October. By December 2017, Bitcoin's closing price had soared to $19,665.

The second round of regulation brought short-term turbulence but also inadvertently promoted global diffusion.

2019: Localized Precise Regulation

Starting in November 2019, Beijing, Shanghai, Guangdong, and other regions began to investigate virtual currency-related activities, shifting the regulatory approach to "localized precise regulation," without easing the intensity. In that month, Bitcoin fell from over $9,000 at the beginning of the month to around $7,700, and market sentiment was once low.

The real trend reversal occurred in the following year. In 2020, driven by the anticipation of halving and global liquidity easing, Bitcoin started a bull market that rose from $7,000 to over $20,000, smoothly connecting to the epic bull market of 2020-2021.

The third round of regulation, in a sense, cleared the path for the next phase of upward movement.

2021: Comprehensive Lockdown, Power Cuts to Mining Farms

In 2021, the intensity of regulation peaked. Two landmark events occurred this year, completely reshaping the structure of the global crypto market. In mid-May, the Financial Stability Committee of the State Council explicitly proposed "cracking down on Bitcoin mining and trading." Subsequently, major mining provinces such as Inner Mongolia, Xinjiang, and Sichuan introduced policies to phase out mining, leading to a nationwide "power cut for mining machines." On September 24, the central bank and ten ministries jointly issued a notice titled "Notice on Further Preventing and Handling Risks of Virtual Currency Trading Speculation," officially clarifying that all virtual currency-related activities are illegal financial activities.

In May, Bitcoin fell from $50,000 to $35,000. Entering June and July, BTC consolidated in the $30,000-$40,000 range, with market sentiment at a low point. Later, Bitcoin rebounded in August, continuing to rise under optimistic expectations of global liquidity, ultimately reaching a historical high of around $68,000 in November.

The fourth round of regulation can delineate boundaries, but it cannot stop the global redistribution of computing power and capital.

2025: Reversal of Expectations - From "Innovative Exploration" to "Comprehensive Tightening"

The regulatory narrative of 2025 is filled with dramatic twists. In the first half of the year, a series of signals made the market sense the "melting of the ice," and a cautiously optimistic sentiment spread within the community: whether it was the discussions in Hong Kong about the stablecoin issuance framework or the "Malux grape" on-chain in the suburbs of Shanghai, the market began to discuss the possibilities of "compliance paths" and the "Chinese model."

The wind suddenly changed at the end of the year. On December 5, the risk warning jointly issued by the seven financial associations conveyed a clear core message:

• Clearly stating that virtual currencies are not legal tender
• Specifically targeting air coins, stablecoins, RWA, and other popular concepts
• Not only prohibiting trading within the country but also banning promotion and diversion, with regulation becoming more detailed

The core upgrade of this risk warning lies in: it not only reiterates the illegality of virtual currency trading but also expands for the first time to the currently hottest sub-sectors (stablecoins, RWA) and promotional activities.

So how will the market respond this time? Unlike before, Chinese capital is no longer the market leader; Wall Street ETFs and institutional holdings have become the new main force. It can be seen that USDT has appeared at a negative premium, indicating that many people are eager to exchange back to fiat currency and exit.

Market Voices: KOL Perspectives

Well-known media personality Wu Shuo @colinwu emphasizes the need to pay attention to the movements of CEX from an execution perspective. The real trend will depend on whether platforms restrict domestic IPs, KYC registration, and C2C functions.

XHunt founder @defiteddy2020 compares mainland China and Hong Kong, believing that the stark contrast in crypto policies reflects different market positioning and regulatory philosophies.

Solv Protocol co-founder @myanTokenGeek believes this round of regulation may lead to two outcomes: one is that users and projects accelerate their overseas expansion, and the other is that underground gray channels will resurface.

Lawyer Liu Honglin @Honglin_lawyer, founder of Shanghai Mankun Law Firm, adds from a legal perspective that many RWA projects are indeed non-compliant, using compliance as a guise for financing and market manipulation, which is essentially no different from fraud. For teams that are genuinely doing work, going overseas is the only solution.

Crypto OG @Bitwux believes this is the official confirmation of something the industry has long known, with limited impact. Regulation is more about reiterating old points, with the focus likely on preventing gray area channels from overflowing.

Independent trader @xtony1314 states that this time the police are leading the charge, and it is no longer just talk. If enforcement actions begin and trading platforms are restricted, it may trigger a wave of "active escape + market panic."

Independent trader @Meta8Mate believes that every time a concept overheats, there will be a risk warning. In 2017 it was ICOs, in 2021 it was mining, and this time it is stablecoins and RWA.

Conclusion: The Storm Never Stops the Tide's Direction; It Only Changes the Course of Navigation

Looking back over these twelve years, we can clearly see a continuously evolving and purpose-driven logical mainline:

Regulatory policies have remained consistent and necessary. A grain of sand in the era becomes a mountain for individuals. The impact of regulatory policies on the industry goes without saying, but we must admit: regulation is meant to protect investors from uncontrollable financial risks and maintain the stability of the local financial system.

Regulatory actions are characterized by distinct "timeliness." Policies often drop when market enthusiasm reaches a peak or a local top, aiming to cool down overheating risks. From the tail end of the 2013 bull market, the ICO frenzy of 2017, the mining peak of 2021, to the current hype around stablecoins and RWA concepts, this pattern holds true.

The long-term effects of policies are diminishing. Except for the first round of regulation in 2013, which directly ended the bull market cycle at that time, subsequent strong interventions (the shutdown of exchanges in 2017 and the mining phase-out in 2021) have not changed Bitcoin's long-term upward trend.

Bitcoin has become a "global game." Wall Street ETFs, Middle Eastern sovereign funds, European institutional custody, and the consensus of global retail investors together form the main support for the current price.

A core conclusion is: the binary pattern of "Eastern strict prevention" and "Western dominant pricing" may become the new normal in the crypto world.

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