Mainland Stablecoin Regulation "Implementation" and Digital RMB 2.0 "Set Sail"

Written by: Mankiw

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, we might easily overlook another more critical clue—on November 28, the regulatory authorities made a clear statement on stablecoins, which is simultaneously reshaping the legal boundaries of the entire digital currency space.

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

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

• The current status of stablecoin regulation on the mainland;
• What fundamental changes Digital RMB 2.0 truly brings to financial logic;
• After red lines for 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 is steadily advancing stablecoin experiments within a legal framework, what is happening on the mainland is not exploration but a re-affirmation of boundaries. In just one 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, in a meeting on anti-money laundering risks and beneficial ownership management, explicitly defined the regulation of “stablecoins.” Previously, the market had hoped that “Hong Kong legislation might pressure mainland policy adjustments,” but after the red line of “illegal financial activities” was emphasized again, this optimistic view was quickly corrected—regulatory attitudes have not loosened but become even clearer.

On the other hand, policy signals are intensifying: at the end of December, Digital RMB 2.0 was officially unveiled. Based on 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 possessing the liability attributes of commercial banks. Its institutional positioning and application boundaries have significantly advanced.

Amid the parallel cold and hot signals, regulatory intent has shifted from covert to overt. This is not a coincidence but a deliberate “changing the cage while keeping the bird” process—by continuously clearing out non-public stablecoins, the authorities are carving out a clear and controllable market space for a government-led digital currency system.

The “Old Wine” and “New Bottle” of Regulatory Logic

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

1. The Disappearing “Splash”: The Market Has Built Immunity

A straightforward indicator is that when the “9.24 Notice” was issued in 2021, BTC immediately plunged, and the industry was in chaos; but after this meeting in 2025, the market even showed no ripple. This market indifference 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 incremental change.

2. The Judicial “Return Shot”: From Warmth to Coldness

The real killer of this meeting is not the “classification,” but the forced recalibration of judicial trends. We need to observe a subtle judicial shift:

2021-2022: Cryptocurrency-related contracts are deemed invalid, risks are borne by parties, courts generally do not provide relief.

Early 2023-2025: Judges begin to understand Web3, no longer simply deny everything on the grounds of “public order and morals.” For civil disputes involving genuine funds, some courts start ruling for proportional repayment of legal tender.

After the end of 2025 (post-11.28): Winter returns. This meeting sends a clear signal that judicial rulings must align with administrative regulation—civil disputes involving Web3 are invalid contracts, and risks are to be 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 touched the most sensitive nerve—foreign exchange controls. Today, USDT and USDC have transformed from Web3 trading tools into “parallel highways” for large fund outflows. From tuition payments for children studying abroad to complex money laundering chains, stablecoins have effectively broken the annual $50,000 foreign exchange quota for individuals.

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

4. Cautious Risks and Outlook

It must be recognized that under the current regulatory approach, safety is prioritized above all. This helps quickly control risks but may also cause a practical consequence: a certain disconnection between the domestic financial system and the globally advancing programmable financial system, reducing space for institutional exploration on public blockchains.

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

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 only 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, unable to generate loans or earn interest margins through 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 core decentralization.

The launch of Digital RMB 2.0 proves that programmability, real-time clearing, and on-chain logic are indeed the inevitable future of currency. However, this form must operate within a centralized, traceable, and 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 Web3 front line, 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 behavior 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 activity involving the exchange of domestic fiat and stablecoins, or using them as payment media or acceptance business, faces greatly reduced legal defense space.

Regulatory tightening: This boundary delineation further restricts non-public entities from participating in financial infrastructure innovation. Within the country, if non-public entities attempt to build unofficial value transfer networks, regardless of technology used, once penetrated by relevant authorities, they are very likely to be legally classified as “illegal clearing.” That is, “technological neutrality” is no longer an invulnerable shield; when activities involve fund collection, settlement, or cross-border transfer, regulatory penetration can directly pierce through complex protocol layers back to the operational entities.

Web3 practitioners’ survival strategies and breakthrough suggestions

The walls are indeed rising higher, but the logic remains intact.

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.

Under the current regulatory environment, a safer approach is to adopt a “strategic diversion” path.

First, business-level globalization and compliance. If the goal is to build permissionless, decentralized financial applications, one should thoroughly go offshore at both physical and legal levels. In jurisdictions like Hong Kong, leveraging frameworks such as the “Stablecoin Regulations” and licensing is an inevitable choice respecting rules, not a stopgap.

Second, conscious “decoupling” of technology and finance. Domestically, any modules with fund-carrying, settlement, or redemption attributes should be avoided. Since the official is promoting a Digital RMB 2.0 ecosystem based on a permissioned system supporting smart contracts, focusing on underlying architecture, security audits, and compliance technology development to serve as a technical provider for official financial infrastructure is currently the most stable and sustainable transformation path for technical teams.

Third, paying attention to 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 facilities may be the real opportunity window in this regulatory reshaping.

Law is never static; it is the result of strategic game-playing.

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