Author: Viee, Amelia, Denise I Biteye Content Team

Recently, the seven major financial associations in mainland China issued the latest risk warning, specifically naming various virtual assets such as stablecoins, RWA, and air coins. Although Bitcoin has not shown significant fluctuations, the recent cooling market sentiment, shrinking accounts, and the off-market discount of USDT have reminded people of the scenes during previous rounds of policy tightening.

Since 2013, the regulation of the crypto space in mainland China has gone through twelve years. Policies have been implemented repeatedly, and the market has responded each time. This article aims to review the market reactions at these key points along the timeline and clarify one question: After the implementation of regulations, will the crypto market fall silent, or will it gather strength to take off again?

I. 2013: Bitcoin Defined as "Virtual Commodity"

On December 5, 2013, the People's Bank of China and five other ministries jointly issued a notice on "Preventing Bitcoin Risks," clearly defining Bitcoin as a "specific virtual commodity" that does not have legal tender status and is not considered currency. At the same time, banks and payment institutions were prohibited from providing services for Bitcoin transactions.

The timing of this notice was quite subtle, coming just after Bitcoin had reached an all-time high of around $1,130 at the end of November. In early December, Bitcoin's price fluctuated between $900 and $1,000, but just a few days after the policy was implemented, the market began to cool rapidly. Throughout December, Bitcoin's closing price dropped to about $755, with a monthly decline of nearly 30%.

In the following months, Bitcoin fell into a prolonged downward consolidation range, with prices generally between $400 and $600. This decline from the peak essentially marked the end of the 2013 bull market. Bitcoin's price continued to stay below $400 until the end of 2015.

The first round of regulation extinguished the early fervor and opened the curtain on the "policy and market" game.

II. 2017: ICO Ban and "Great Migration" of Exchanges

2017 was an extremely tumultuous year for the crypto market and also marked the most decisive regulatory actions. On September 4, seven ministries issued a notice on "Preventing Risks of Token Issuance and Financing," classifying ICOs as illegal fundraising and requiring domestic exchanges to shut down completely. On that day, Bitcoin closed around $4,300. However, just a week after the policy was announced, BTC dropped to a low of $3,000.

Although this round of regulation temporarily severed the dominance of domestic exchanges, it did not shake the foundation of the global bull market. As trading activities quickly migrated to places like Singapore, Japan, and South Korea, Bitcoin rebounded rapidly after a phase of clearing, starting a rise in October. By December 2017, Bitcoin's closing price had soared to $19,665.

The second round of regulation brought short-term turbulence but also inadvertently promoted global diffusion.

III. 2019: Localized Precise Regulation

Starting in November 2019, Beijing, Shanghai, Guangdong, and other regions began to investigate virtual currency-related activities, shifting the regulatory approach to "localized precise regulation," without easing the intensity. In that month, Bitcoin fell from over $9,000 at the beginning of the month to around $7,700, and market sentiment was temporarily low.

The real trend reversal occurred in the following year. In 2020, driven by the anticipation of halving and global liquidity easing, Bitcoin entered a bull market that started from $7,000 and surged to over $20,000, smoothly connecting to the epic bull market of 2020-2021.

The third round of regulation, in a sense, cleared the path for the next phase of upward movement.

IV. 2021: Comprehensive Lockdown, Power Cuts for Mines

In 2021, the intensity of regulation peaked. Two landmark events occurred this year, completely reshaping the structure of the global crypto market. In mid-May, the Financial Stability Committee of the State Council explicitly proposed "cracking down on Bitcoin mining and trading." Subsequently, major mining provinces like Inner Mongolia, Xinjiang, and Sichuan introduced policies to phase out mining, leading to a nationwide "power cut for mining machines." On September 24, the central bank and ten ministries jointly issued a notice on "Further Preventing and Handling Risks of Virtual Currency Trading Speculation," formally clarifying that all virtual currency-related activities are illegal financial activities.

In May, Bitcoin fell from $50,000 to $35,000. Entering June and July, BTC consolidated in the $30,000-$40,000 range, with market sentiment at a low point. Later, Bitcoin rebounded in August, continuing to rise under optimistic expectations of global liquidity, ultimately reaching a historical high of around $68,000 in November.

The fourth round of regulation can delineate boundaries, but it cannot stop the global redistribution of computing power and capital.

V. 2025: Reversal of Expectations - From "Innovative Exploration" to "Comprehensive Tightening"

The regulatory narrative in 2025 is filled with dramatic twists. In the first half of the year, a series of signals made the market sense the "melting of the ice," and a cautiously optimistic sentiment spread within the community: whether it was the discussions in Hong Kong about the stablecoin issuance framework or the "Malux grape" on-chain in the suburbs of Shanghai, the market began to discuss the possibilities of "compliance paths" and the "Chinese model."

The wind suddenly changed direction at the end of the year. On December 5, the risk warning jointly issued by the seven financial associations conveyed a clear core message:

• Clearly stating that virtual currencies are not legal tender
• Specifically targeting air coins, stablecoins, RWA, and other popular concepts
• Not only banning trading domestically but also prohibiting promotional activities, with regulation becoming more detailed

The core upgrade of this risk warning lies in: it not only reiterates the illegality of virtual currency trading but also expands for the first time to the currently hottest sub-sectors (stablecoins, RWA) and promotional activities.

So how will the market respond this time? Unlike before, Chinese capital is no longer the market leader; Wall Street ETFs and institutional holdings have become the new main force. It can be seen that USDT has appeared at a negative premium, indicating that many people are eager to exchange back to fiat currency and exit.

VI. Voices from the Market: KOL Perspectives

Well-known media personality Wu Shuo @colinwu reminds everyone to pay attention to the movements of CEX from an execution perspective. The real trend will depend on whether platforms restrict domestic IPs, KYC registrations, and C2C functions.

XHunt founder @defiteddy2020 compares the mainland and Hong Kong, believing that the stark contrast in crypto policies reflects different market positioning and regulatory philosophies.

Solv Protocol co-founder @myanTokenGeek believes this round of regulation may lead to two outcomes: one is that users and projects accelerate their overseas expansion, and the other is the resurgence of underground gray channels.

Lawyer Liu Honglin, founder of Shanghai Mankun Law Firm @Honglin_lawyer, adds from a legal perspective that many RWA projects are indeed non-compliant, using compliance as a guise for fundraising and price manipulation, which is essentially no different from fraud. For teams that are genuinely doing business, going overseas is the only solution.

Crypto OG @Bitwux believes this is the official acknowledgment of something the industry has long known, with limited impact. Regulation is more about reiterating old points, with the focus likely on preventing the overflow of gray area channels.

Independent trader @xtony1314 states that this time the police are taking the lead, and it is no longer just talk. If subsequent law enforcement actions begin to restrict trading platforms, it may trigger a wave of "proactive exits + market panic."

Independent trader @Meta8Mate believes that every time a concept overheats, there will be a risk warning. In 2017 it was ICOs, in 2021 it was mining, and this time it is stablecoins and RWA.

VII. Conclusion: The Storm Never Stops the Tide's Direction; It Only Changes the Course of Navigation

Looking back over these twelve years, we can clearly see a continuously evolving and clearly defined logical mainline:

1. Regulatory policies have remained consistent and necessary. A grain of sand in the era can become a mountain for individuals. The impact of regulatory policies on the industry is self-evident, but we must admit: regulation is to protect investors from uncontrollable financial risks and maintain the stability of the local financial system.
2. Regulatory actions have a distinct "timeliness." Policies often drop when market enthusiasm reaches a peak or a local top, aiming to cool down overheating risks. From the tail end of the 2013 bull market, the ICO frenzy in 2017, the mining peak in 2021, to the current hype around stablecoins and RWA concepts, this pattern holds true.
3. The long-term effects of policies are diminishing. Except for the first round of regulation in 2013, which directly ended the bull market cycle at that time, subsequent strong interventions (the shutdown of exchanges in 2017 and the crackdown on mining in 2021) have not changed Bitcoin's long-term upward trend.
4. Bitcoin has become a "global game." Wall Street ETFs, Middle Eastern sovereign funds, European institutional custody, and the consensus of global retail investors together constitute the main support for the current price.

A core conclusion is: the binary pattern of "Eastern strict prevention" and "Western dominant pricing" may become the new norm in the crypto world.

Data is sourced from public platforms, and the content is for informational sharing only, not promoting or endorsing any tokens. Readers are advised to strictly comply with the laws and regulations of their respective regions and not engage in any illegal financial activities.

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