Mainland China stabilizes cryptocurrency regulation and the launch of Digital RMB 2.0

Original Author: Lawyer Zhao Xuan

Introduction

Recently, many friends have been asking: What exactly has been upgraded in Digital RMB 2.0? Will it affect our crypto assets?

But if we only focus on Digital RMB, it’s easy to overlook another more critical clue——On November 28, the regulatory authorities made a clear statement on stablecoins, which is simultaneously reshaping the entire legal boundary of digital currencies.

These two events are not unrelated. Viewing them within the same regulatory logic reveals: one is clarifying what can no longer be done, while the other is telling the market what directions are permitted.

This article aims not to simply judge “positive or negative,” but to clarify three things in light of the November 28 meeting and the emergence of Digital RMB 2.0:

• The current status of stablecoin regulation in Mainland China;
• What fundamental changes Digital RMB 2.0 truly brings to financial logic;
• After red lines on illegal financial activities are redrawn, how can Web3 practitioners choose their paths?

The “Cold and Hot” at the End of 2025

By the end of 2025, China’s Web3 industry stands at a crucial juncture. If Hong Kong’s southbound efforts are steadily advancing stablecoin regulation within a legal framework, what is happening on the mainland is not exploration but a reaffirmation of boundaries. Within just a month, practitioners have clearly felt that a more explicit and rigid regulatory paradigm is taking shape.

On one hand, industry expectations are cooling rapidly: On November 28, the People’s Bank of China and other departments, at a meeting on anti-money laundering risks and beneficial ownership management, made a clear regulatory stance on “stablecoins.” Previously, the market hoped that “Hong Kong’s legislation might prompt slight policy adjustments on the mainland,” but after the red line on “illegal financial activities” was emphasized again, this optimistic view was quickly corrected—regulatory attitude remains firm and even clearer.

On the other hand, policy signals are also intensifying: By the end of December, Digital RMB 2.0 was officially unveiled. According to current disclosures, the new phase of Digital RMB has evolved from a simple “digital cash” form to a “digital deposit currency” supporting interest accrual, complex smart contracts, and bearing the liabilities of commercial banks, with significantly advanced institutional positioning and application boundaries.

Under the parallel cold and hot, regulatory intent has shifted from implicit to explicit. This is not coincidental policy coordination but an orderly “changing the cage for the bird”—by continuously clearing out non-public stablecoins, the authorities are carving out a clear and controllable market space for the state-led digital currency system.

Old Wine in New Bottles: The Logic of Regulatory Frameworks

Many try to interpret the regulations of November 28, 2025, seeking new regulatory rules. But we believe this is merely a reiteration of the “9.24 Notice” from 2021.

1. The Disappearing “Splash”: The Market Has Already Built Resistance

A straightforward indicator is: when the “9.24 Notice” was issued in 2021, BTC immediately plummeted, and the industry was in chaos; but after this 2025 meeting, the market even showed no ripple. This market coldness stems from logical repetition.

Four years ago, regulators explicitly classified “Tether (USDT)” as an illegal virtual currency. Even though this meeting highlighted that “stablecoins also belong to virtual currencies,” there is no legal increment in this regard.

2. Judicial Reversal: From Warmth to Coldness

The real “trump card” of this meeting is not in the “qualification,” but in a forced reversal of judicial trends. We need to observe a subtle judicial shift:

• 2021-2022: Contracts involving tokens are invalid, risks are borne by the parties, courts generally do not provide remedies.
• Early 2023-2025: Judges begin to understand Web3, no longer simply deny everything on the basis of “public order and good morals.” For civil disputes involving genuine money transactions, some courts start ruling “proportionally refund in legal currency.”
• After the end of 2025 (post-11.28): Winter returns. This meeting sends a clear signal that judicial rulings must align with administrative regulation—meaning, for Web3 civil disputes, invalid contracts are invalid, and risks are borne by the parties.

3. The True Anchor of Regulation: Blocking “Underground Pipelines” for Foreign Exchange

Why does administrative power reaffirm the “old rules” now? Because stablecoins have already touched the most sensitive nerve—foreign exchange controls. Today, USDT and USDC have transformed from Web3 trading tools into “parallel highways” for large sums of capital outflows. From tuition payments for studying abroad to complex money laundering chains, stablecoins have effectively broken the annual $50,000 quota limit per person.

The essence of the November 28 meeting is not about technology but about foreign exchange issues. The regulators’ repeated emphasis is because they have found that even with strict controls, due to the instant settlement feature of stablecoins, gaps still exist in foreign exchange regulation.

4. Cautious Risks and Outlook

What needs to be recognized is that, under the current regulatory approach, safety is prioritized above all. This helps quickly control risks but may also cause a practical disconnection between the domestic financial system and the globally advancing programmable financial system, reducing space for institutional exploration on public blockchains in the short term.

Digital RMB: From 1.0 Exploration to 2.0 “Logical Rebuilding”

Why is it necessary to define stablecoins at this point?

Because Digital RMB 2.0 carries the mission of integrating “technological logic into the sovereignty framework.”

In the era of Digital RMB 1.0: It was mainly on the user side, as M0 (cash) with no interest, making it difficult to compete with highly mature third-party payment tools in the existing market. On the banking side, commercial banks in 1.0 only served as “distribution windows,” bearing heavy anti-money laundering and system maintenance costs, but unable to derive loans or earn interest margins from Digital RMB, lacking intrinsic commercial motivation.

In the era of Digital RMB 2.0: Based on current disclosures, the following changes are observed: shifting from “digital cash” to “digital deposit currency,” with real-name wallets earning interest. Technologically, version 2.0 emphasizes compatibility with distributed ledgers and smart contracts, seen in the industry as an absorption of some Web3 technologies, but without adopting its decentralized core.

The launch of Digital RMB 2.0 proves that programmability, real-time settlement, and on-chain logic are indeed the inevitable future of currency. However, this form must operate within a centralized, traceable, sovereign-backed closed loop domestically. This centralization attempt is a product of the evolution of technology and governance logic.

Legal Red Lines: Defining the Boundaries of “Illegal Financial Activities”

As a lawyer long practicing on the frontlines of Web3, I must warn all practitioners: The risk landscape after 2025 has shifted from “regulatory flaws” to “criminal bottom line.” This judgment includes but is not limited to:

Accelerated behavioral classification: Large-scale buying and selling of virtual currencies like USDT are rapidly shifting from administrative violations to criminal charges such as illegal business operations. Especially after the clear classification of stablecoins, any business involving the exchange of domestic fiat and stablecoins, or using them as payment or acceptance media, faces greatly reduced legal defense space.

Regulatory escalation: This boundary delineation further restricts non-public entities from participating in financial infrastructure innovation. Within China, if a non-public entity attempts to build an unofficial value transfer network, regardless of the technology used, once penetrated by relevant authorities, it is very likely to be legally classified as “illegal clearing.” “Technology neutrality” is no longer an invulnerable shield; when activities involve fund collection, settlement, or cross-border transfer, regulatory penetration can directly pierce through complex protocols back to the operational entities.

Survival Strategies and Breakthrough Suggestions for Web3 Practitioners

While the walls are indeed rising higher, the logic has not been interrupted.

The absorption of smart contracts in Digital RMB 2.0 itself indicates that: technology has not been denied but has been re-incorporated into a controllable institutional framework. This leaves room for Web3 practitioners who truly understand technology and business logic to make practical adjustments.

In the current regulatory environment, a more prudent approach is to adopt a “strategic diversion” path.

First, business-level globalization and compliance. If the goal is to build permissionless, decentralized financial applications, it is essential to fully go offshore physically and legally. In jurisdictions like Hong Kong, leveraging licensing frameworks such as the “Stablecoin Regulations” to develop global operations is a necessary choice respecting rules, not a stopgap.

Second, conscious “decoupling” of technology and finance. Domestically, avoid any modules with fund-carrying, settlement, or payment attributes. Since the official is promoting a permissioned ecosystem supporting smart contracts in Digital RMB 2.0, focusing on underlying architecture, security audits, and compliance tech development—serving as a technical provider for official financial infrastructure—is the most stable and sustainable transformation path for tech teams.

Third, explore new opportunities within official channels. Cross-border payment systems like multilateral CBDC bridges are becoming some of the few areas with room for expansion within the compliance framework. Finding technological innovation points within existing institutional infrastructure may be the real opportunity window in this regulatory reshaping.

Law is never static but a result of strategic contest.

Rules may seem strict, but understanding them is to make better choices. In the environment of “changing the cage for the bird,” blind opposition only amplifies risks; what truly matters is, after red lines are redrawn, helping the most valuable technological forces find anchors to survive and go forward.