This time it's really different—a detailed explanation of the eight departments' "Notice on Further Preventing and Handling Risks Related to Virtual Currency"

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February 6, 2026, was supposed to be an ordinary day before the Lunar New Year. In the morning, Bitcoin plummeted, reaching a low of nearly $60,000. In the evening, eight departments, including the People's Bank of China, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the State Financial Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange, jointly issued the "Notice on Further Preventing and Handling Risks Related to Virtual Currencies " (Yinfa [2026] No. 42, hereinafter referred to as the "2.6 Notice"). "2.6" is destined to be recorded in the history of virtual currencies, and it seems that the reason for this crash has been found.

1. Unlike previous regulatory documents such as the 94 Announcement and 924 Notice, this Notice No. 2.6 adds a clause at the end: This Notice shall take effect from the date of its issuance. The "Notice on Further Preventing and Handling Risks of Virtual Currency Trading and Speculation" (Yinfa [2021] No. 237) issued by the People's Bank of China and other ten departments is hereby repealed. This is the first time in the history of virtual currency regulation that a previous regulatory document has been repealed.

At the Financial Street Forum at the end of last year, Pan Gongsheng, the governor of the People's Bank of China, specifically mentioned stablecoins and RWA. He also emphasized that the regulatory policies since 2017 are still effective. Now, eight departments have jointly issued a document to abolish the Notice on September 24. Therefore, the earlier regulatory document, Announcement on September 4, should also be abolished.

Judging from the titles, the Notice on September 24th is titled "Notice on Further Preventing and Handling Risks of Virtual Currency Trading and Speculation," which emphasizes the risks of trading and speculation. In contrast, the Notice on February 6th is simply summarized as "Risks Related to Virtual Currencies," which has a significantly broader scope.

2. Looking at the issuing agencies, compared to the 924 ten-department notice, this 2.6 notice is missing the Supreme People's Procuratorate and the Supreme People's Court, which was quite unexpected . Since 2024, the two courts have successively intervened, using the investigation of the handling of virtual currency cases as a starting point, and have carried out a great deal of work. In my view, the laws and policies on the handling of virtual currency cases are likely to be the first to be promulgated. Furthermore, the Central Political and Legal Affairs Commission clearly stated at its working conference that forward-looking research and legislation on virtual currencies should be conducted, making the absence of the two courts even more surprising.

However, Notice 2.6 also explicitly states that it was "after reaching an agreement with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the consent of the State Council." This wording has not appeared in previous virtual currency regulatory documents, and the specific reasons and intentions are currently impossible to interpret or analyze. My understanding is that the relevant content is agreed upon in principle, but the specific wording may not have been finalized yet.

3. Compared to previous statements, the biggest breakthrough in Notice 2.6 is that it explicitly states for the first time that "stablecoins pegged to legal tender effectively perform some of the functions of legal tender in circulation and use. Without the consent of relevant departments in accordance with laws and regulations, no entity or individual, whether domestic or foreign, may issue stablecoins pegged to RMB overseas."

The second half of this sentence is not difficult to understand; the literal meaning is quite clear. The most crucial part is the first half: "indirectly fulfilling some functions of legal tender." As a criminal defense lawyer, my biggest concern is whether, in judicial practice, this will be used as a basis to consider the exchange between legal tender and stablecoins as "indirect foreign exchange trading." It's important to know that indirect foreign exchange trading constitutes the crime of illegal business operations, which can be punished with a fine of one to five times the illegal gains, and the illegal gains must be turned over to the national treasury. This clause targets OTC (over-the-counter) trading. The key is whether the specific implementation will be distorted, deviate from, or over-emphasized. If the力度 (strength/intensity) is too great, the risks to the entire OTC industry will surge. As we all know, OTC is an indispensable industry in the virtual currency field.

4. In short, regarding RWA, it is strictly prohibited to conduct such activities within the territory of China, and domestic entities are strictly prohibited from doing so. Foreign companies and individuals are also prohibited from conducting such activities within the territory of China or providing services to domestic entities.

However, a loophole has been left for whether this can be done overseas. The China Securities Regulatory Commission (CSRC) has issued the "Regulatory Guidelines on the Issuance of Asset-Backed Securities Tokens Overseas by Domestic Assets," which will be interpreted later.

5. Compared with previous regulatory documents, Notice 2.6 devotes more space to standardizing and improving working mechanisms, strengthening risk monitoring, prevention and handling.

First, the "8+3" model involves the central government overseeing local efforts. Eight departments, together with the Cyberspace Administration of China, the Supreme People's Procuratorate, and the Supreme People's Court, provide overall guidance to various regions in preventing and handling risks related to illegal financial activities involving virtual currencies.

Second, we must strengthen local implementation, form a working pattern of central-local coordination and integration of different departments and regions, actively prevent and properly handle issues, and maintain economic and financial order and social stability.

Third, strengthen risk monitoring, continuously improve monitoring technologies and system support, enhance cross-departmental data analysis and sharing, establish and improve information sharing and cross-verification mechanisms, and ensure that provincial governments fully leverage their local monitoring and early warning mechanisms. Local financial management departments, in conjunction with branches and agencies of the State Council's financial management departments, as well as departments such as cyberspace administration and public security, should effectively coordinate online monitoring, offline investigation, and fund monitoring to ensure efficient and accurate identification, investigation, and rapid response mechanisms. Technology companies may be poised for a boom in business.

Fourth, strengthen the management of financial, intermediary, and technology service institutions, and prohibit the inclusion of virtual currencies and related financial products in the scope of collateral. Strengthen the management of internet information content and access, and provide technical support and assistance for related investigations and investigative work. Strengthen the registration and advertising management of business entities. Continue to crack down on virtual currency "mining" activities. Close existing ones and strictly prohibit new ones. Severely crack down on related illegal financial activities, and transfer cases suspected of crimes to judicial organs for handling according to law. Severely crack down on illegal and criminal activities related to virtual currencies and the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, and illegal fundraising, as well as related illegal and criminal activities carried out under the guise of virtual currencies and the tokenization of real-world assets.

6. Domestic entities conducting related business overseas are inherently subject to inherent restrictions. First, they cannot issue virtual currencies, even overseas. Second, domestic entities engaging in RWA (Real-Time Warehouse) transactions should be subject to regulation according to the principle of "same business, same risk, same rules." Third, overseas subsidiaries and branches of domestic financial institutions providing RWA services overseas must comply with certain requirements; this is essentially a loophole, but it must be clarified that this loophole is reserved for financial institutions.

7. Compared with previous regulatory policies, the format of Notice 2.6 has added "legal responsibility". The literal meaning is not complicated and will not be interpreted in detail.