However, when facing new things, many Chinese people often react first not to "is it prohibited" but "is it allowed". This kind of thinking inertia is not an individual rational choice, but a collective unconsciousness left by two thousand years of feudal rule:

We are more accustomed to being "obedient citizens" and only doing things that are expressly permitted by the law, rather than "citizens" under modern rule of law - as long as the law does not prohibit it, we have the freedom to do it.

This deep cultural path dependence is the real background for the question of "Is Bitcoin legal?" being repeatedly raised.

Of course, many people still have doubts about this fact, and the fundamental reason lies in the practical difficulties brought about by regulatory measures.

Although it is legal to hold and trade Bitcoin, the actual difficulties of Bitcoin trading in China are caused by strict supervision.

This point was also described in detail in the 2021 article. Especially in the "September 4th Incident" in 2017, the central bank and seven other departments jointly issued the "Announcement on Preventing the Risks of Token Issuance and Financing", which directly led to the closure of all Bitcoin trading platforms in China.

This regulatory action is not aimed at Bitcoin itself, but is out of the need for financial stability and risk prevention.

Looking back at history, we can better understand the logic of regulation: At that time, the ICO craze swept the country, and financial risks were prominent. In order to avoid greater risks and social instability, the regulators chose a "one-size-fits-all" regulatory measure.

Although the cost was huge, judging from the results, China's financial system did achieve stable operation.

2. The world

After the closure of domestic market trading platforms, Chinese traders turned to overseas markets, and the global trading pattern of Bitcoin also changed accordingly.

In 2021, I mentioned in my article: Among the top ten economies in the world at that time, only China prohibited banks and payment institutions from participating in Bitcoin transactions. Now, this pattern has basically not changed. Bitcoin is still in a legal and free trading state in major economies in the world, such as the United States, Japan, Germany, the United Kingdom, and South Korea.

Since 2022, the global economy has continued to fluctuate, and the Federal Reserve has frequently raised interest rates, resulting in capital outflows from emerging markets to the United States, and the Chinese economy has therefore been under great pressure.

Especially since Trump came to power again, the U.S. regulation of crypto assets has ushered in a critical "policy turn" - from prevention to absorption.

The Bitcoin Reserve Act signed by Trump in 2024 recognized for the first time that Bitcoin can be included in the government's balance sheet as a strategic reserve asset; and the GENIUS Act (stablecoin) just passed by the Senate provides a clear compliance channel for on-chain dollars such as USDC and USDT. These changes are not only technical innovations, but also a frontier battle for monetary sovereignty competition.

Compared to the United States' strategic ambition to use Bitcoin to deal with inflation and monetary hegemony, China is more concerned about the overall stability of industry, exports and employment. Against the backdrop of a still strong manufacturing chain, the core of China's financial policy is not to compete for global asset pricing power, but to "support" the uncertainty brought about by the adjustment of the domestic economic structure.

Facing the trade war 2.0 launched by Trump - the resumption of tariff barriers, supply chain containment, and increased chip restrictions - China needs a sufficiently "stable" financial environment to cope with external shocks. This "stability" means keeping a distance from all highly volatile assets, even if they are innovative.

Bitcoin is naturally volatile and full of speculation. Once it is linked to the social financing system, it may trigger "speculative contagion" and cause secondary risks.

Therefore, "tight supervision" does not completely deny its value, but builds a "buffer zone" for the domestic financial system to delay shocks. Therefore, all the problems you encounter in deposits and withdrawals are not difficult to understand based on this background.

3. "Enemy"

The original intention of Bitcoin was to establish a decentralized and borderless financial system to get rid of the hegemony of the US dollar, which coincides with China's long-term strategic intention to challenge the hegemony of the US dollar.

In fact, Zhou Xiaochuan, the former governor of the People's Bank of China, proposed the idea of ​​establishing a supranational international reserve currency (SDR) as early as 2009. This monetary system, similar to the original intention of Bitcoin, has always been one of the goals pursued by the People's Bank of China. It is for this reason that Zhou Xiaochuan proposed the famous "stamp theory" in 2014, defining Bitcoin as a commodity to avoid direct conflicts with monetary regulation.

When I mentioned this metaphor in 2021, it resonated strongly with readers because it precisely pointed out the subtle game relationship between regulation and law.

But what’s interesting is that decentralized stablecoins may be China’s “gray weapon” in this game of dollar hegemony. I have elaborated on this in “Tariffs are knives, currencies are shields: an opportunity for “dollar hegemony rupture” and “the rise of stablecoins””.

The key point is that the assets anchored by decentralized stablecoins no longer rely on the US dollar, but are composed of decentralized assets such as BTC and ETH - this means that they can neither be frozen nor arbitrarily touched by the US judicial system.

This just won China an unprecedented strategic maneuvering space: without directly challenging the hegemony of the US dollar and tearing up the geo-currency relationship, it achieved a "quasi-decoupling" from the US dollar clearing system.

From this perspective, China's choice to leave a "controllable" exit on the chain while stabilizing the RMB exchange rate and controlling cross-border capital flows is a smart trade-off.

Decentralized stablecoins, like an underground passage, provide China with another turning point in the high-pressure blockade of geo-finance. In the era of the evolution of the global monetary system from "centralized settlement" to "protocol-based settlement", Bitcoin, as an important collateral asset behind decentralized stablecoins, will no longer be just a private hedging option, it may quietly become a shadow chess piece in the game between countries.

4. Dividends

In the past few years, despite strict regulatory measures, the price of Bitcoin has continued to break through historical highs. The acceptance of Bitcoin is gradually increasing worldwide.

As the world's second largest economy, China's regulatory attitude towards Bitcoin will undoubtedly have a significant impact on the global market. When China's regulatory environment changes, the global Bitcoin market will inevitably experience huge fluctuations.

This is the so-called regulatory dividend.

The essence of this "regulatory dividend" is actually very simple: a market that has been suppressed for a long time will usher in a stage where funds will quickly flow in and demand will soar once the regulatory environment becomes loose. This phenomenon is not uncommon. It has been played out many times in the Chinese stock market, real estate market and Internet finance in history. This is especially true for the Bitcoin market.

Recall that before the "September 4th Incident" in 2017, the Chinese market once accounted for nearly 90% of the global Bitcoin trading volume, but it quickly fell to less than 1% after the overall tightening of regulations. Such a large-scale market demand has been artificially suppressed for a long time, which means that once the policy is relaxed in the future or a new window period appears, market sentiment will explode instantly, forming extremely strong purchasing power.

A more representative example is that the UK Financial Conduct Authority (FCA) approved the application of institutional investors to trade Bitcoin-backed securities in March 2024. The move marks a major shift in UK policy, driving a surge in Bitcoin prices to a record high of $72,000. This policy change not only affects the UK market, but also has a positive impact on global investors, highlighting the far-reaching impact of regulatory policies on the crypto asset market. More importantly, the regulatory dividend is also accompanied by structural changes in the Bitcoin market. Chinese institutional investors, who once maintained a cautious attitude towards crypto assets, have begun to actively pay attention to the trends in overseas markets in recent years, and have deployed crypto assets through overseas funds and compliant channels. For example, the "Huabao Overseas Technology C (QDII-FOF-LOF)" fund under China Huabao Fund Management Co., Ltd. advertised through the Alipay platform in December 2024, emphasizing its indirect investment in Coinbase and ARK 21Shares Bitcoin ETF. The fund allows users to purchase up to 1,000 yuan per day, with a minimum investment of 10 yuan. This move shows that despite mainland China's cautious attitude towards crypto assets, investors can still indirectly participate in the global crypto asset market through compliant channels.

In the long run, the regulatory dividend of Bitcoin is not just a simple price increase, but represents an opportunity to reshape global capital allocation. When the Chinese market reintegrates into the global Bitcoin ecosystem, global capital will inevitably accelerate the inflow of this long-term "undervalued" market. The decentralized and global liquidity characteristics of the Bitcoin market determine that it will become one of the fastest and most sensitive channels for cross-border capital allocation.

Therefore, the real charm of the regulatory dividend is that it not only indicates the rise of Bitcoin prices, but also means that China may gradually re-participate in the construction of the global financial order and participate in the global currency game in a more proactive, flexible and competitive manner. This opportunity may have just begun to show its outline for today's investors.

Conclusion

True legitimacy has never been fully defined by simple legal provisions. It is also a manifestation of the consensus of the times. When we repeatedly ask "Is Bitcoin legal?", what we are actually asking is our identity positioning as individuals and society: Do we continue to be passive and obedient citizens, or do we take the initiative to seize the "citizen dividend" given by the times?

The dispute over the legality of Bitcoin will not end easily because of a clear legal provision, but the trend of decentralization has long been irreversible.

The hegemony of the US dollar will eventually be washed away by the tide of history, and the decentralized monetary and financial order has just emerged.

For us, Bitcoin should not only be an asset that floats in the capital market, but also an important opportunity for the awakening of citizenship and the capture of the dividends of the times.

Today, we are standing at an important node from "obedient thinking" to "citizen consciousness". The real value of Bitcoin is not only the asset itself, but also the trend and concept behind it.

Remember the wisdom this era has given us:

In the era of the rise of the new order, the real risk is not volatility, but missing out.

If you don’t want to miss the "citizen dividend" given to you by this era, please take a close look at these two articles:

• Bitcoin: The ultimate hedge for long-termists?

• Asymmetry, the background of Bitcoin from the perspective of "value investment"

Action starts with becoming a "citizen" who actively strives for dividends.