It took nearly two years from filing the case to the verdict, and a lot of manpower and material resources were invested. Although the court finally made a confiscation judgment on "partial freezing of virtual currency", according to insiders, the actual amount recovered was far lower than expected.

The reason is that a large number of assets involved in the case are stored in overseas trading platforms or overseas company accounts in the form of virtual currency. For example, Tether, the issuer of USDT, is registered in the United States. Chinese law enforcement agencies hope that it will cooperate with judicial seizure, but they also face many practical difficulties.

5

The reality of law enforcement in fragmented strikes is not a cure for the root cause

The above problems reveal a reality: for the main culprits who really do evil, the cost of breaking the law is often just to let "marginal figures" serve their sentences as scapegoats; and for those who are caught, they are just a link in the entire chain - neither the organizers nor the planners, nor do they have the ability to bear the consequences of the entire chain. Although the crackdown of criminal law is deterrent, in practice, "introducers", "transporters" and "exchangers" have become the main targets of punishment, and it is difficult to cure the root cause.

At the same time, it is worth pondering whether the large amount of police force and law enforcement resources invested by the state in each case can be exchanged for systematic governance effects. Let us review the typical cases reported by the authorities in recent years:

• Shanghai Pudong Court announced a major case of illegal cross-border exchange of 6.5 billion stablecoins. Yang used 17 shell companies to manipulate cross-border "counter-trading" (2025)

• Beijing police cracked a 2 billion yuan virtual currency serial case, using USDT for "cross-border counter-trading" to provide RMB-foreign currency exchange channels for gamblers, cross-border e-commerce, etc. (2024)

• Shandong Qingdao police and The Qingdao Branch of the State Administration of Foreign Exchange jointly cracked a major underground money laundering case, involving a total amount of 15.8 billion yuan (2023)

• Hubei Jingmen police cracked the first virtual currency case in the country, and Hubei Jingmen police cracked a cross-border online gambling case, involving a turnover of 400 billion yuan (2023)

• Zhejiang Hangzhou Court sentenced Zhao and others to illegal business operations by collecting dirhams in Dubai, purchasing USDT, and selling RMB in China, involving a turnover of 400 billion yuan (2023)

• data-pm-slice="0 0 []">43.85 million yuan (2022)

• Shanghai Baoshan Court sentenced Guo Mouzhao, Fan Mouxun and others to set up websites such as "tw711 platform" and "fire speed platform" for illegal foreign exchange, involving a turnover of 220 million yuan (2022)

In practice, there seems to be a sense of loss of control of "the more you block, the more leaks" and "the bigger the fight, the bigger it gets". The country hopes to achieve a warning effect for the whole society through punishment of individual cases, but the actual situation is that everyone is an island, trapped in their own information cocoon. Before the incident, these people may not have paid attention to the relevant news, or even if they saw it, they did not realize the seriousness of the problem and whether it was related to them.

6

We actively abandoned the dominance of stablecoins

If fighting against gray industries is "defense", then leading the legal alternative path should be "attack". But unfortunately, in this field, we abandoned our own initiative.

Looking back at the past, China was once the world's largest stablecoin country. Today, the founders of exchanges that are well-known in the global currency circle - Binance, OKX, Gate.io, Huobi, Matcha, etc. are almost all Chinese. Once, the exchange operation team was located in China, and the currency circle information platform developed in clusters. Most users used RMB or RMB stablecoins to complete virtual currency transaction settlements.

But now, all this has become a thing of the past. If it were not for the continuous introduction of policy barriers, which forced project parties, platform operators, and investment teams to shut down or choose to go overseas, China would have had a great chance to dominate the entire stablecoin ecosystem. And now those who stay in China are often just low-level workers.

In addition to policy blockade, my country is also trying to find another way. Since 2016, the central bank has launched the research and development of digital RMB, clearly put forward the goal of publicly issuing digital currency, and Yao Qian served as the first director of the Digital Currency Research Institute. Its design goal, to some extent, is to benchmark the US dollar stablecoin, and try to achieve the following intentions through digital RMB:

• Reduce dependence on the US dollar channel, use digital RMB for settlement in cross-border trade, investment, aid and other scenarios, bypass SWIFT and the US dollar clearing system, and reduce the risk of international sanctions;

• Repress capital flight and illegal exchange, and replace the role of USDT and USDC in the underground financial system from a technical level;

• Provide an "official", compliant, and fee-free digital cash tool for enterprises and individuals to weaken the gray attraction of stablecoins.

However, due to the lack of extensive application scenarios and ecological support for the digital RMB, even though the technical level is basically ready, the market acceptance is still sluggish, and the forced melon is not sweet. This path has not formed a truly effective payment alternative. If users do not pay, it is not feasible to force promotion by administrative orders.

In addition, there is a little black humor. On November 20, 2024, the official report on Yao Qian’s serious violations of discipline and law mentioned that he abused his power during his tenure, provided "close" support to specific technology companies, and was suspected of using virtual currency for power-for-money transactions, becoming the key training target of those "hunters" who should have been regulated.

The failure to promote the digital RMB to achieve policy goals proves the limitations of the political path on the one hand, and also highlights the other side of the "ban" on stablecoins on the other hand: policy resistance has not eliminated the problem itself, but has made the gray path more hidden and the underground transactions more complex and hidden. For existing supervision, it has brought more troubles.

7

What are the advantages of stablecoins? What are the use scenarios?

On July 18, 2025, US President Trump signed the Genius Act, which formally established the regulatory framework for digital stablecoins. In this regard, Sun Lijian, director of the Financial Research Center of Fudan Development Research Institute, publicly commented: "The US dollar stablecoin is essentially a tokenized projection of the US dollar in the blockchain world and a digital extension of the US dollar hegemony. It has magnified the global penetration of the US dollar through technical means, but it has also brought new systemic risks. For countries, stablecoins have also become a new battlefield for monetary sovereignty games."

Looking back, what we used to regard as dregs seems to be regarded as a treasure by our opponents. At the same time, it has now become a weapon for our opponents to counter us?

From a technical perspective, stablecoins are a programmable digital asset that is anchored to the value of legal currency and runs on a blockchain network. Its core mechanism is to map the book value of legal currency to homogeneous tokens on the chain through the custody of off-chain reserve assets (such as US dollars, RMB, etc.). It can be transferred without relying on bank accounts, relying on smart contracts for automatic execution, and has the characteristics of high efficiency, decentralization, and low cost.

For this reason, stablecoins are widely used in the following typical scenarios:

• Cross-border trade settlement: enterprises can use USDT or USDC and other US dollar stablecoins to achieve cross-border payments in seconds, greatly reducing foreign exchange fees and settlement cycles;

• Free trade zone and bonded warehouse payment system: In the free trade zone, RMB stablecoins can be used for one-click account splitting, covering warehousing, customs, logistics and other scenarios;

• Supply chain finance: platform enterprises Use stablecoins to discount accounts receivable and automatically complete multi-level split transfers between upstream and downstream;

• Carbon trading and digital asset markets: "On-chain credit assets" with stablecoins as the target can achieve 7×24 hours of automatic matching, improving the liquidity of assets such as carbon credits and digital rights;

• B-end and C-end payment tools: As a seamless intermediary in payment scenarios such as cross-border salary payment, overseas study payment, offshore financial management, and margin management, stablecoins can effectively connect the "last mile" between the traditional financial system and the on-chain economy.

We must see that stablecoins may indeed be used for illegal activities such as money laundering and private foreign exchange, but they also have practical positive uses, which is why the United States, Hong Kong, China, Singapore and many other places are actively trying to explore the design of "compliance sandboxes" for them.

Therefore, when evaluating the regulatory policy of stablecoins, we should not only focus on its risk labels such as "anonymity" and "borderless", but also need to deeply understand its value in cross-border payments, financial services, industrial collaboration, etc. Instead of completely excluding it from the system, it is better to face up to its logic of action and think about how to use it in a controllable way.

8

Stablecoins are not a tool for crime, and the lack of system is the root of the problem

Stablecoins are not a natural tool for crime, but a carrier of the new financial structure. Whether it will be abused depends on whether the system can follow up in time. Blindly suppressing cannot hinder the rapid development of technology. At the same time, what we lose is not only the failure of supervision to meet expectations, but also the global competitiveness that could have been mastered. (In fact, it seems that we have never actively strived for and actively built it).

From my experience as a criminal lawyer, the vacuum of the system brings substantial law enforcement difficulties.

First, there is a system vacuum and the case-handling units are lagging behind in their understanding.

Domestic policies blindly suppress and deny the value and significance of virtual currencies, and lack relevant legal basis and case-handling guidelines. In fact, from the perspective of law enforcement, this is not conducive to the smooth handling of cases and the correct implementation of the law.

We represent Web3-related criminal cases in many places across the country and frequently deal with judicial authorities at different levels. It can be said responsibly that the vast majority of grassroots case-handling personnel still lack basic understanding of the technical principles and operating mechanisms of blockchain. This requires our lawyers to popularize basic concepts to case-handling personnel, and the second step is to start arguments about legal disputes.

For example, in a recent Web3 case we represented, the local judicial authorities hoped that our client would voluntarily hand over hundreds of millions of virtual currencies as "illegal gains", but the presiding judge of the case asked us in the communication with us before the trial: What do these strings of letters and numbers (addresses, transaction hashes) mean? ——The case handler who decides the fate of the parties knows nothing about this field, but this is the norm for us to handle a large number of criminal cases involving virtual currency, Web3 project parties, and exchanges.

Second, the crackdown strategy is fragmented, and law enforcement behavior is like "whack-a-mole".

At present, my country's regulatory path for stablecoins and virtual currencies has not formed a systematic compliance guide. From the perspective of the prosecution, cases involving virtual currency and Web3 often lack clear boundaries in terms of characterization, which can easily lead to vacillation in the application of the law, and also make law enforcement officers exhausted and always trapped in the "whack-a-mole dilemma".

The judicial organs have long relied on "plugging loopholes and catching the current" to maintain the bottom line, which is destined to be a high-cost, low-output method. As long as there is real demand in the market, as long as there is still room for cross-border payments and on-chain transactions, there will always be "alternative solutions" to be developed. At this time, catching "marginal people" and sealing "downstream ports" is just a continuation of the traditional logic of combating crime, which is destined to treat the symptoms but not the root cause, and it is difficult to form a truly sustainable governance system.

Really effective institutional construction is neither "purely relying on crackdowns" nor "building behind closed doors", but to build a system that achieves a dynamic balance between security and efficiency. This is the direction that financial governance should take in the future.

9

Conclusion

The real way out is not to block technical tools such as "stablecoins", but to build a compliant ecosystem that can guide, replace and regulate, so that virtual currency regulatory policies can play a precise and effective role. Let those who should be cracked down have nowhere to hide, and let those who should be used be used for our own purposes.