Authors: Viee, Amelia, Denise, Biteye Content Team
Recently, seven major financial associations in mainland China issued the latest risk warnings, naming various virtual assets such as stablecoins, RWAs (Real-World Assets), and meme coins. Although Bitcoin has not shown significant fluctuations thus far, the recent downturn in market sentiment, shrinking accounts, and discounted OTC prices of USDT have evoked memories of previous rounds of policy tightening.
From 2013 to the present, regulatory oversight of the crypto sector in mainland China has spanned twelve years. Each time policies were implemented, markets responded accordingly. This article aims to review the market reactions at these critical junctures along the timeline and also clarify one question: After regulation takes effect, will the crypto market fall silent, or will it regroup and set off again?
2013: Bitcoin Defined as a 'Virtual Commodity'
On December 5, 2013, five ministries, including the People's Bank of China, jointly released the 'Notice on Preventing Bitcoin Risks,' which for the first time explicitly defined Bitcoin as a 'specific virtual commodity.' It was clarified that Bitcoin does not possess legal tender status and is not considered currency. Additionally, banks and payment institutions were prohibited from providing services for Bitcoin transactions.
The timing of this notice was quite delicate, coming just after Bitcoin had reached an all-time high of approximately $1,130 at the end of November. In early December, the price of Bitcoin was still fluctuating between $900 and $1,000. However, just days after the policy was announced, the market began to cool rapidly. By the end of December, Bitcoin’s closing price had dropped to around $755, with a monthly decline of nearly 30%.
In the following months, Bitcoin entered a prolonged period of downward volatility, with prices mostly ranging between $400 and $600. This pullback from its peak effectively marked the end of the 2013 bull market. Afterward, Bitcoin’s price remained below $400 until the end of 2015.
The first round of regulation extinguished the flames of early enthusiasm and also set the stage for the ongoing 'policy vs. market' tug-of-war.
2017: ICO Ban and the 'Great Migration' of Exchanges
2017 was an exceptionally tumultuous year for the cryptocurrency market, and also one where regulatory measures were most decisive. On September 4, seven government departments issued the 'Announcement on Preventing Risks of Token Issuance and Financing,' defining ICOs as illegal fundraising and ordering domestic exchanges to shut down entirely. On that day, Bitcoin closed near $4,300. However, within a week of the policy announcement, BTC fell as low as $3,000.
However, while this round of regulation temporarily severed the dominance of mainland exchanges in the short term, it failed to shake the foundation of the global bull market. As trading activities rapidly migrated to Singapore, Japan, South Korea, and other regions, Bitcoin, after completing a phase of market clearance, experienced an accelerated rebound, beginning a steady rise in October. Three months later, by December 2017, Bitcoin's closing price had surged to $19,665.
The second wave of regulation brought about short-term turbulence but also inadvertently propelled globalization.
2019: Localized Precision Crackdown
Starting from November 2019, Beijing, Shanghai, Guangdong, and other regions successively investigated virtual currency-related activities, shifting regulatory methods to 'localized precision crackdowns,' with no relaxation in enforcement. That month, Bitcoin fell from over $9,000 at the beginning of the month to around $7,700, causing market sentiment to slump temporarily.
The real turning point in trends occurred the following year. In 2020, driven by the anticipation of Bitcoin’s halving event and the global easing of liquidity, Bitcoin embarked on a bull market prelude, rising from $7,000 to over $20,000, smoothly transitioning into the epic bull market of 2020–2021.
In a sense, the third round of regulation cleared the path for the next phase of upward movement.
2021: Total Blockade, Mining Operations Shut Down
In 2021, regulatory intensity reached its peak. Two landmark events occurred that year, fundamentally reshaping the structure of the global cryptocurrency market. In mid-May, the Financial Stability and Development Committee under the State Council explicitly called for 'cracking down on Bitcoin mining and trading.' Subsequently, major mining provinces such as Inner Mongolia, Xinjiang, and Sichuan successively issued policies to phase out mining operations, leading to a nationwide 'mining rig power-off wave.' On September 24, the central bank and nine other ministries jointly issued the 'Notice on Further Preventing and Disposing of Risks Related to Virtual Currency Trading and Speculation,' officially declaring all virtual currency-related activities illegal financial activities.
In May alone, Bitcoin fell from $50,000 to $35,000. Entering June and July, BTC consolidated within the $30,000–$40,000 range, with market sentiment hitting rock bottom. However, Bitcoin bottomed out and rebounded in August, continuing its upward trajectory driven by optimistic expectations of global liquidity, eventually reaching a new all-time high near $68,000 in November.
The fourth round of regulation demonstrated that while policies can set boundaries, they cannot halt the global redistribution of computing power and capital.
2025: The Anticipated Reversal – From 'Innovation Exploration' to 'Comprehensive Tightening'
The regulatory narrative of 2025 is filled with dramatic turns. In the first half of the year, a series of signals gave the market a sense of 'melting ice,' with cautious optimism spreading within the industry: from discussions in Hong Kong about the framework for stablecoin issuance to the tokenization of 'Malu grapes' in suburban Shanghai, the market began to explore the possibilities of 'compliance pathways' and the 'China model.'
The winds shifted abruptly by the end of the year. On December 5, a joint risk advisory issued by seven major financial associations conveyed a clear message:
- Virtual currencies are not legal tender.
- Specific mention was made to crack down on popular concepts such as meme coins, stablecoins, and RWA (Real World Assets).
- Not only are domestic transactions banned, but promotional activities and traffic diversion are also prohibited, reflecting more detailed regulatory scrutiny.
The core upgrade of this risk advisory lies in its reiteration of the illegality of virtual currency trading while expanding for the first time into the hottest sub-sectors (stablecoins, RWA) and promotional behaviors.
So, where will the market go from here? Unlike in the past, Chinese capital no longer dominates the market; Wall Street ETFs and institutional holdings have become the new driving forces. Notably, USDT has been trading at a discount, indicating that many are rushing to convert back to fiat currency and exit the market.
Market Voices: Summary of KOL Perspectives
Renowned media personality Wu Shuo (@colinwu), focusing on the implementation level, reminded everyone to pay attention to developments at centralized exchanges (CEXs). The true direction will depend on whether platforms impose restrictions on domestic IPs, KYC registration processes, and peer-to-peer (C2C) functionalities.
XHunt founder @defiteddy2020 compared mainland China and Hong Kong, noting that the stark contrast in crypto policies reflects different market orientations and regulatory philosophies.
Solv Protocol co-founder @myanTokenGeek believes this round of regulation may lead to two outcomes: an acceleration of users and projects moving overseas, and the resurgence of underground gray channels.
Liu Honglin, founder of Shanghai Mankun Law Firm @Honglin_lawyer, added from a legal perspective that many RWA-type projects are indeed non-compliant. Under the guise of compliance, they raise funds and manipulate prices, which is essentially no different from fraud. For teams genuinely doing work, going overseas is the only solution.
Crypto OG @Bitwux believes this is merely official confirmation of something the industry has long known, with limited impact. The regulation mostly reiterates past warnings, with the focus potentially on preventing spillover from gray-area channels.
Independent trader @xtony1314 stated that this time it’s led by public security authorities, and it’s no longer just talk. If enforcement actions follow and trading platforms are restricted, it may trigger a wave of 'voluntary exodus + market panic selling.'
Independent trader @Meta8Mate believes that whenever a concept overheats, risk warnings emerge. In 2017 it was ICOs, in 2021 it was mining, and this time it’s stablecoins and RWA.
Conclusion: The storm has never stopped the tide; it has only changed the course of navigation.
Looking back over these twelve years, we can clearly see a continuously evolving and goal-oriented logical thread:
Regulatory policies have remained consistent, necessary, and reasonable. A grain of sand in the era, when it falls on an individual, becomes a mountain. The impact of regulatory policies on the industry goes without saying, but we must admit: regulation aims to protect investors from uncontrollable financial risks and maintain the stability of the local financial system.
Regulatory intervention exhibits a clear 'timing' characteristic. Policies often come into effect when market enthusiasm reaches a peak or local apex, aiming to cool overheated risks. From the late bull market of 2013, the ICO frenzy of 2017, the mining peak of 2021, to the current rise in stablecoin and RWA concept speculation, the pattern holds true.
The long-term effects of the policy are diminishing. Apart from the first round of regulation in 2013 that directly ended the bull market cycle at the time, subsequent strong interventions (such as the shutdown of exchanges in 2017 and the elimination of mining in 2021) did not alter Bitcoin's long-term upward trend.
Bitcoin has become a 'global game.' Wall Street’s ETFs, Middle Eastern sovereign wealth funds, European institutional custody, and even the consensus among global retail investors collectively form the main support for the current price.
A core conclusion is that the dual structure of 'strict prevention and control in the East' versus 'price leadership in the West' may become the new normal in the crypto world.
