Written by: Oliver, Mars Finance
Midnight Announcement and the $5,000 Bullish Candle
At midnight on July 11, 2025, a seemingly ordinary official WeChat public account push set off a huge wave in the cryptocurrency community in China and even the world. The publisher was the Shanghai State-owned Assets Supervision and Administration Commission (referred to as the 'Shanghai SASAC'), and the content was about a central group study meeting held by its party committee on July 10, focusing on the theme of 'Development Trends and Countermeasures of Cryptocurrencies and Stablecoins'.
As soon as the news came out, the market responded in the most direct and primitive way. In the following hours, the price of Bitcoin was like a shackle, soaring all the way from about $111,300 to a high of over $118,400, pulling out a huge positive line of more than $7,000 during the day, and setting a record high. Accompanying the soaring price was a sharp increase in trading volume, which clearly showed that a strong buying force was instantly activated. The most sensitive thing in the cryptocurrency market is always the nerve called 'policy sentiment'.
This raises a core question: Why can an internal study meeting of a local state-owned assets management department trigger such violent price fluctuations in top global crypto assets? What exactly did the 'smart money' in the market read from this short announcement? The answer is not hidden on the surface of the text, but is deeply rooted in China's complex attitude towards cryptocurrencies for a decade, Hong Kong's unique role as a financial special zone, and the grand narrative of the future of digital finance. What the market is trading is not the meeting itself, but a potential strategic shift it foreshadows.
Seeing the Leopard Through a Tube: A Carefully Calculated Embrace, Not a Full Opening
To gain insight into the market's excitement, it is necessary to deeply analyze the specific content leaked from this study meeting. The meeting invited Li Mingliang, chief expert of the Guotai Haitong Policy and Industry Research Institute, to give a special report. The concept he proposed is far from a simple 'study' or 'understanding', but a set of well-thought-out and highly operable strategic framework.
The most weighty recommendation in the report is to build a dual-currency system of RMB stablecoins: namely CNYC (domestic offshore RMB stablecoin) and CNHC (offshore offshore RMB stablecoin). This is an extremely ingenious design. CNHC is intended to become a stablecoin pegged to offshore RMB that freely circulates in the global crypto market, directly competing with USD stablecoins such as USDT and USDC. CNYC may be used in special regulatory areas such as the Shanghai Free Trade Zone to serve specific cross-border trade and financial scenarios. This 'dual-track' design aims to achieve a perfect balance between open competition and risk isolation.
More crucially, the report clearly proposes to achieve compliance through 'electronic fence' technology. This vocabulary is the key to understanding China's new strategy. It means that this is by no means an unconditional surrender to the crypto world, but a premeditated and self-led 'pacification'. 'Electronic fence' implies a licensed or closely monitored system, where transactions will be restricted to specific users, jurisdictions, or application scenarios, thereby effectively preventing the disorderly outflow of capital and the transmission of financial risks that Beijing is most wary of.
The strategic goal of all this directly points to the 'integration of industry and numbers' emphasized by He Qing, director of the Shanghai SASAC, in his concluding remarks, that is, to explore the application of blockchain technology in 'cross-border trade, supply chain finance, and asset digitization'. This is completely consistent with the goal in the report that stablecoins should support 'RWA (real-world asset) settlement and RMB internationalization'. This clearly shows that the driving force behind Shanghai's exploration this time stems from the national-level industrial upgrading and currency internationalization strategy, rather than meeting private speculative demands. It is finding a compliant channel for China's huge assets to enter the global digital value network, and it is also opening up a new track for the RMB to bypass the traditional SWIFT system.
Policy Great Wall: Contradictory History and Stubborn Reality
The reason why the positive signal released by Shanghai is so shocking is precisely because it forms a sharp contrast with the strict regulatory history of mainland China over the past decade. Only by reviewing this history full of contradictions and games can we understand the profound meaning that the current transformation may contain.
China's crypto regulation has roughly gone through three stages. The first stage began in 2013, when the People's Bank of China and other five ministries issued a document prohibiting financial institutions from participating in Bitcoin business, defining it as a 'specific virtual commodity' rather than currency. The second stage reached its climax in 2017, when regulators defined ICOs (Initial Coin Offerings) as 'illegal public financing' and comprehensively banned domestic cryptocurrency exchanges with thunderous force. The official reason given was to prevent financial risks and fraud. At that time, an official from the People's Bank of China pointed out that more than 90% of ICO projects on the market were suspected of fraud.
The third stage, which is also the most stringent, arrived in 2021. The People's Bank of China and other ten ministries jointly issued a notice, completely defining virtual currency-related business activities as 'illegal financial activities' and comprehensively suppressing cryptocurrency 'mining'. The official motivation behind this move is multiple: first, the huge energy consumption runs counter to China's 'carbon peaking and carbon neutrality' goals; second, illegal activities such as money laundering, gambling, and capital flight through virtual currencies are becoming increasingly rampant. Blockchain analysis company Chainalysis once estimated in a report that in 2020 alone, approximately US$50 billion worth of crypto assets flowed from East Asia (mainly China) overseas.
However, the strict ban did not eradicate the demand, but instead spawned a huge and hidden underground market. As Chainalysis pointed out in a report in early 2024, even under the strictest crackdown, China's grassroots adoption rate of cryptocurrencies still ranks among the highest in the world. After the exchanges were banned, users quickly turned to more decentralized over-the-counter (OTC) platforms and peer-to-peer networks. Especially in times of increased economic uncertainty, there are clear signs that funds flowing into cryptocurrencies through OTC channels have increased significantly. Ben Charoenwong, a professor of finance at INSEAD, commented: 'In certain environments, cryptocurrencies are seen by some as a hedging tool and a channel for asset preservation.'
This reveals a profound policy paradox: strict bans aimed at strengthening financial control have objectively pushed related activities into a harder-to-track gray area, which to some extent weakens the effectiveness of regulation. Perhaps it is precisely the recognition of this stubborn reality that has prompted policymakers to start thinking about a new strategy - instead of blocking, it is better to dredge, and establish a compliant channel that they can control and is more attractive.
Hong Kong's Changes: One Country, Two 'Cryptos'
While mainland China was erecting high walls against cryptocurrencies, Hong Kong, separated by a strip of water, was rolling out the red carpet. This stark contrast is not accidental, but a precise strategic layout under the 'One Country, Two Systems' framework. Hong Kong is playing a key role as China's crypto strategic test field and international interface.
In the past two years, Hong Kong has built a comprehensive digital asset regulatory system at an astonishing speed. It has introduced a mandatory licensing system for virtual asset service providers (VASPs), and has put forward strict requirements for anti-money laundering (AML) and investor protection comparable to traditional financial institutions. In June 2025, Hong Kong officially announced the (Stablecoin Issuer Ordinance Draft) and plans to implement it on August 1, paving the legal path for the issuance of compliant stablecoins. More symbolically, in February 2025, Consensus, the world's most influential cryptocurrency summit, chose to be held in a city outside North America for the first time in more than ten years - Hong Kong - attracting nearly 10,000 practitioners from around the world. Paul Chan Mo-po, the Financial Secretary of Hong Kong, attended the event and declared 'Hong Kong is back, Web3 is back'.
Hong Kong's openness and Shanghai's exploration form a perfect strategic synergy. The CNHC (offshore RMB stablecoin) conceived by Shanghai would ideally be issued and tested in Hong Kong. By issuing through licensed institutions established in Hong Kong and supervised by the Hong Kong Monetary Authority, CNHC can compete with USD stablecoins in the global market, and the potential financial risks it may generate are absorbed by Hong Kong's mature regulatory system and independent financial firewall, without directly impacting the mainland. This is the essence of the 'One Country, Two 'Cryptos'' strategy. It allows China to achieve two seemingly contradictory goals simultaneously: in the mainland, maintaining the stability of the financial system and strict capital controls; in Hong Kong, actively participating in global digital financial innovation and competition, and competing for the discourse power of the next-generation Internet.
Game of Top-Level Design: Another Voice Beyond the Shanghai-Hong Kong Model
However, the 'sandbox' model of Shanghai-Hong Kong linkage, although ingenious and stable, has also triggered deeper strategic thinking. One view is that this method of focusing on the offshore market and limited pilot projects may not have fully utilized China's core scale advantage as the world's second-largest economy. In the all-round digital financial competition with the United States, relying solely on Hong Kong as a 'special zone' as a window may not be enough to form an overwhelming competitive advantage.
This voice calls for China to conduct a fundamental review and definition of the virtual capital market from a broader national perspective. The core lies in the need to face up to and distinguish between two fundamentally different types of financial needs: 'investment' and 'speculation'. In his view, stablecoins are essentially more like investment chips in a speculative financial market, whose main function is to serve high-frequency trading and risk hedging, rather than direct payment or value storage. Avoiding its 'speculative' attribute is tantamount to burying one's head in the sand.
Based on this understanding, a bolder blueprint emerges. In this concept, Shanghai and Hong Kong will play distinctly different but complementary roles. Shanghai, as the economic heart of China, should focus on the construction of the 'investment' financial virtual capital market. Its core task is to vigorously promote the digital RMB (e-CNY), serve the digital transformation of the real economy, and provide a platform for financing and investment based on real assets and future rights and interests for massive enterprises, families, and individuals, completely stripping off the purely financial speculation function. Hong Kong should be built into a strictly regulated, international 'speculative' financial virtual capital market. Here, compliant RMB stablecoins will be one of the core trading mediums, directly facing off against USD stablecoins, providing a credible 'RMB solution' for the global virtual economy.
To realize this grand blueprint, infrastructure must come first. The concept of establishing a 'China Digital Network' company similar to the 'State Grid' has emerged. This company will be responsible for building the world's top-level blockchain underlying platform to ensure the convenience, security, efficiency, and low cost of transactions. At the same time, clarifying the role of state-owned financial capital is also crucial. They should not participate in market competition as ordinary players, but should undertake the mission of the 'national team' and focus on strategic investments to implement the national will, such as saturated angel round investments in key technology fields, or playing the role of the final stabilizer when the market fails.
Two Futures of the New Game
When we weave together all the clues and opinions, the significance of this study meeting of the Shanghai SASAC transcends a single policy signal. It is more like a signpost at a crossroads, pointing to two possibilities for China's digital financial strategy.
The first future is the gradual approach represented by the current linkage between Shanghai and Hong Kong. It is cautious and pragmatic, and through 'electronic fences' and offshore pilot fields, it carefully explores its tentacles on the premise of strictly controlling risks, trying to open up a new path for RMB internationalization and RWA without changing the existing financial landscape in China. This is the wisdom of 'crossing the river by feeling the stones', aiming to accumulate small victories into big ones.
The second future is a more profound, top-down systemic change. It requires decision-makers to face up to the dual nature of virtual capital, and through the strategic division of the market into 'investment' and 'speculation', allow Shanghai and Hong Kong to perform their respective duties, supplemented by national-level digital infrastructure construction. This is undoubtedly a bigger game, intending to accomplish everything in one battle, not only to participate in the game, but also to reshape the rules of the game.
Therefore, the sentiment behind the $7,000 surge in K-line in today's market is far more complex than imagined. It is not only an instant pricing of the 'open' signal, but also a fierce game and imagination about what path China will choose in the future. Traders are betting on the possibility of the world's second-largest economy from a 'strict regulator' of the crypto world to a 'controlled participant' and even eventually becoming a 'rule maker'. The midnight announcement may not be a starting gun, but the opening bell of this grand game concerning China's digital financial national fortune.
