Many people don’t understand: if there’s nothing wrong with the technology, why are some regions so strict about cryptocurrency? The answer lies in two invisible “red lines”—capital controls and tax transparency. Crossing either could trigger systemic risks.

Let’s start with the first line. Suppose you cash out 5 million yuan in a central city and want to legally transfer out $700,000. Reality bites: the annual individual foreign exchange purchase limit is capped at $50,000, so doing this by the book would take 14 years; splitting the limit among friends and family? Carrying more than $5,000 in cash out of the country will get you flagged; multiple people cooperating for transfers? Linking more than three accounts immediately triggers risk control alerts. But what about on-chain assets? In theory, you could find 14 people to exchange in batches, write the mnemonic phrase on a slip of paper and physically take it out of the country—anonymity renders traditional regulatory tools almost useless.

The second line is even more critical—the tax collection system could be entirely circumvented. Today’s big data systems can track every transaction, but the anonymous nature of decentralized ledgers inherently resists this kind of penetrative oversight. There are already cases showing some high-income individuals using “on-chain exchange + over-the-counter trading” to transfer income. If this practice becomes widespread, both corporate profits and personal income could slip out of the regulatory field of view, creating an uncontrollable gap in fiscal revenue.

The fundamental contradiction is this: crypto assets have the value storage properties of gold, but are more flexible than payment tools—they require no physical carrier, can circulate globally, and operate entirely outside of centralized clearing systems. These traits inherently conflict with the foundational structure of current financial regulation, and that’s the core reason some jurisdictions classify them as illegal financial activities. Technology neutrality isn’t wrong, but when a tool threatens the two pillars of macro-control, the choice becomes obvious.