Following Brother Wu's explanation, let's discuss the central government's recent document. From my personal perspective, it mainly revolves around the three words "stablecoin."

The first sentence states, "Virtual currencies do not have the same legal status as legal tender, do not have legal compensation, and should not and cannot circulate as currency in the market," which directly defines the legal status of cryptocurrencies and fiat currencies.

In essence, everyone knows that in China, it is possible to hold $BTC, but trading it is illegal. If trading is illegal, how can it be equated with the legal status of fiat currency? Therefore, this sentence starts by emphasizing stablecoins, especially since there are laws regarding stablecoins in the United States and legislation in Hong Kong. Mainland China’s priority is to distinguish between what is outside and what is inside; regardless of what happens outside, what is inside is illegal and cannot circulate.

The second sentence states, "Activities related to virtual currencies are considered illegal financial activities." This is nothing new; it has been around for a long time.

Essentially, it still says that engaging in any business or activities related to cryptocurrencies in mainland China is illegal. Business includes development, operation, maintenance, community, etc., while activities include meetings, forums, gatherings, etc. If you say you are doing it secretly and are not being discovered, that is certainly possible; even "if the people do not report, the officials will not investigate" is normal.

So, does that mean if someone claims you are involved in cryptocurrency, you will definitely face severe consequences? Not necessarily; law enforcement has its costs. Therefore, many individuals are clearly operating within the country and publicly engaging in some cryptocurrency activities, but if they really take action, it may not be worth it. Thus, "showing off wealth" and "scalping" within the country are the most dangerous.

The third sentence states, "Stablecoins are a form of virtual currency, and currently cannot effectively meet customer identity verification, anti-money laundering, and other requirements, posing risks of being used for money laundering, fundraising fraud, illegal cross-border fund transfers, and other illegal activities," which is the core point.

It directly indicates that stablecoins cannot meet KYC and AML requirements. Some may ask, isn't the digital yuan also a stablecoin? That is completely wrong; the digital yuan and stablecoins are fundamentally different. The digital yuan is directly issued by the central bank, just distributed through different channels and traceable, but not transparent. I won't elaborate on that further.

The most important aspects are "money laundering, fundraising fraud, illegal cross-border fund transfers." Although three issues are mentioned, the degree of harm is entirely different, corresponding to individual impact, social impact, and national impact, especially since stablecoins bypass China's foreign exchange controls, creating a parallel dollar system. Some may ask, why? This would not affect China's foreign exchange reserves.

Yes. But essentially, it does not affect foreign exchange reserves; it is equivalent to circumventing foreign exchange controls, constructing an unregulated "shadow dollar system," which directly threatens the sovereignty of the renminbi and cross-border fund monitoring.

Therefore, from my personal perspective, OTC is currently the most dangerous cryptocurrency-related business in the country.

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