Stablecoins buying US stocks are opening a dangerous underground highway.

Several news items in the past two days, taken individually, are significant. On one hand, established cross-border online brokerages like Tiger Brokers, Futu, and Changqiao are facing regulatory scrutiny and accountability; on the other hand, cryptocurrency exchanges like Binance are aggressively promoting stock trading, integrating US stocks, ETFs, stablecoins, and crypto assets into a single account system; and yet another hand, the State Council has released the "Regulations of the State Council on Outward Investment," further elevating the regulatory framework for China's outward investment management. These events appear to belong to different sectors: securities regulation, cryptocurrency exchange innovation, and administrative regulations on outward investment. However, when viewed together, they all point to the same thing: Chinese residents' demand for overseas asset allocation is growing stronger, but legal, low-friction, and accessible channels for ordinary individuals to access overseas markets have not opened simultaneously. This demand will not disappear due to tightening regulations. It will simply shift its focus. In the past, this path might have been overseas brokerages; now, it is likely to become stablecoins. The cleanup of old channels doesn't mean the impulse to buy overseas assets has disappeared. For over a decade, mainland Chinese residents have often used a familiar path to buy US and Hong Kong stocks: download an overseas brokerage app, submit identity information, open an account, deposit funds through an overseas account or other means, and then start buying stocks, funds, and options. This model worked not because it lacked regulatory risk, but because it was convenient and met the real needs of some users. Chinese investors do have a need for global asset allocation. Many aren't inherently inclined to break the law. They simply see Nvidia's stock price soaring, AI's soaring, and aerospace, energy, chips, and robotics constantly creating wealth stories, and then look back at their own assets, inevitably feeling anxious. The problem is, the legal path is not smooth. For ordinary individuals, directly, freely, and at low cost exchanging RMB for USD to buy stocks in overseas markets is not a simple matter. The convenient foreign exchange purchase quota is not a free investment quota; the regulatory stance has always been clear: individuals cannot arbitrarily use foreign exchange purchases for overseas securities investment, real estate purchases, or other capital account purposes. Consequently, overseas online brokerages once catered to a significant portion of this demand. However, regulators are now re-examining this approach. They are looking beyond platform registration, server location, and transaction matching; they are examining more practical questions: Where are the customers? Where is the marketing? Where is the account opening guidance? Where is the customer service? Where do trading orders come from? Where do funds flow in and out? If an overseas platform consistently serves mainland Chinese users through Chinese-language pages, Chinese-language customer service, Chinese-language communities, KOL-driven traffic, and commission-based agency services, it's difficult to completely eliminate risk simply by stating "I am an overseas entity." Therefore, the investigations of Tiger Brokers, Futu, and Changqiao are not limited to a few companies facing difficulties. This is more like a signal: the old gray-area cross-border securities service model of "person in China, platform overseas, business completed through an app" is entering a period of cleanup. However, this doesn't mean the demand for buying overseas stocks will disappear. After the old channels are cleared, the real question is: where will this demand go? Stablecoins are becoming a new intermediary layer for funds. The answer is likely stablecoins. In the past, buying US stocks involved at least several steps: bank foreign exchange purchase, overseas remittance, brokerage deposit, purpose of funds verification, and account review. Each step may not necessarily stop you, but it will remind you that this is a cross-border financial transaction. Now, the path is changing. A person can first use RMB to buy USDT or USDC, then transfer the stablecoin to an overseas exchange, brokerage, or stock trading platform. Then, within the same app, they can buy US stocks, ETFs, and even tokenized stocks, stock-linked certificates, and on-chain RWA products in the future. Operationally, it becomes very similar to a regular asset exchange. The user sees it as: "I just bought Nvidia with USDT." However, regulators see a different picture: Is RMB capital leaving the country through virtual asset channels? Is it circumventing foreign exchange usage restrictions? Is it participating in unlicensed overseas securities services? Have the profits been declared and taxed? Can the source and destination of the funds be explained? This is the special position of stablecoins in this issue. It is not just a payment tool, nor is it just a unit of account for crypto assets. It is becoming a funding intermediary layer for Chinese residents to allocate overseas assets. The most troublesome aspect of this intermediary layer is that it breaks up the originally relatively complete regulatory chain. RMB transfer is one segment, buying USDT is another, on-chain transfer is yet another, depositing funds into exchanges is yet another, buying stocks is yet another, and converting future returns back to RMB is yet another. Each segment, viewed individually, seems to have some explanation; but together, it constitutes a de facto cross-border asset allocation. Stablecoins haven't created this demand; they've merely provided it with a low-friction, highly concealed, and globalized channel for the first time. The smoother this channel, the tighter the regulation becomes. The wealth effect will push more and more people onto this path. This issue cannot be viewed solely from a regulatory perspective; it must also be viewed from a human perspective. Recently, overseas markets have been very adept at storytelling. AI, chips, aerospace, energy, quantum computing, robots—these terms are creating new possibilities every day. Many Chinese investors, even those unfamiliar with these industries, quickly form a simplistic judgment: the opportunities seem to be all overseas. Coupled with the amplifying effect of social media, stories of success are constantly shared, while stories of risk are often ignored. Consequently, many people adopt the following mindset: "I don't want to break the law, I'm just afraid of missing out." "I don't want to launder money, I just want to allocate some assets overseas." "I don't want to evade taxes, I just think everyone else is doing it." "I'm not a professional investor, but I can't just watch global asset prices rise without affecting me." This mindset is very real, but also very dangerous. What many individual investors truly underestimate is that they think they're just buying a little bit of U.S. or U.S. stocks, but they're actually entering a complex regulatory landscape. The platform's willingness to conduct KYC does not equate to Chinese regulatory approval of this path. The exchange's ability to allow trading does not guarantee the legality of your funds leaving the country. The fact that profits haven't been repatriated does not mean there are no tax obligations. Small amounts do not mean there's no risk of account freezing, risk control measures, or investigations. Just because others do it doesn't mean it's problem-free. During market booms, many people easily mistake liquidity for security. Being able to buy doesn't equate to legality; being able to withdraw doesn't equate to cleanliness; being able to earn doesn't mean you can explain it clearly later. What regulators are truly worried about isn't stocks, but the loss of control over the capital chain. This issue cannot be simply interpreted as "regulators preventing individuals from buying US stocks." What regulators are truly worried about is that stablecoins are simultaneously intertwining four systems. First, there's foreign exchange management. China's capital account is not fully open. Individuals buying stablecoins with RMB and then using them to enter overseas stock, ETF, fund, and tokenized securities markets may essentially be circumventing traditional bank foreign exchange purchases and overseas remittance reviews. Second, there's securities regulation. Overseas brokerages, cryptocurrency exchanges, and stock tokenization platforms that provide services such as account opening, marketing, trading, customer service, fund transfers, and commission rebates to users in mainland China may be involved in illegal cross-border securities operations. Regulators focus on the substantive service chain, not just whether a platform holds a particular overseas license. Thirdly, there is tax regulation. The overseas income of Chinese tax residents does not automatically disappear simply because the money remains overseas, the account is opened overseas, or the returns are denominated in stablecoins. The real issues are whether individuals have truthfully declared their income, how costs are proven, how returns are calculated, whether taxes already paid overseas can be credited, and whether account information will be exchanged back through international tax transparency mechanisms in the future. Fourthly, there is anti-money laundering regulation. Stablecoins are too easily transferable, making them too susceptible to the infiltration of high-risk funds. An ordinary person might buy USDT simply to buy stocks, but the USDT they receive could originate from online gambling, telecom fraud, Ponzi schemes, scams, sanctioned addresses, or other illicit channels. Only when their bank cards are frozen, exchange accounts are restricted, and judicial authorities demand an explanation of the source of their funds do they realize they haven't been following a clean financial pipeline. This is the real complexity of using stablecoins to buy US stocks. It's not a simple matter of "investment freedom," but rather a complex issue that involves foreign exchange, securities, taxation, anti-money laundering, personal information, and the transparency of overseas assets. The regulatory task isn't to address a single platform, stock, or stablecoin, but rather to rediscover this fragmented financial chain. The biggest personal risk is the inability to explain things later. Many people asking this type of question are most concerned with one question: Will I get into trouble? This question cannot be answered simply. If it's just personal funds, a small amount, and occasional allocation of overseas assets, the first things to be exposed are usually account risk control, tax declaration, explanation of the source of funds, and administrative compliance risks. However, if the behavior continues, the risk will quickly change. For example, helping others buy or sell USD; frequently and regularly facilitating the exchange of RMB and stablecoins; earning exchange rate differences or handling fees; using multiple bank cards to split payments; using false trade or services to disguise the purpose of funds; assisting others in converting domestic funds into overseas USD assets; knowingly or should have known that the source of funds is abnormal, yet still continuing to participate in payments and transfers. At this point, it's no longer just a story of "I bought some US stocks." It could become issues of illegal currency exchange, underground banks, illegal business operations, money laundering, or even concealing or disguising the proceeds of crime. What truly drags individuals into criminal risk is often not that they bought overseas stocks, but that they unknowingly became someone else's financial conduit. The same applies to tax issues. Many people believe that as long as overseas assets don't return to their home country, no one will know; as long as the exchange is overseas, there are no reporting issues; and as long as the returns are in stablecoins, they don't count as income. These understandings are all dangerous. Global tax transparency and information exchange mechanisms for crypto assets will undoubtedly continue to advance. Overseas brokerage accounts, bank accounts, custodian accounts, and fund accounts will become increasingly transparent, and crypto asset accounts will not forever remain a regulatory blind spot. At that time, an individual's biggest problem may not be "what they bought," but rather: Where did the principal come from? How did the money leave the country? How are the transaction costs proven? Were the profits declared? Do the balances in overseas accounts match the level of income in China? Did you act as a middleman for others? Did you come into contact with contaminated funds? Financial regulation often doesn't just look at a single action, but whether you can clearly explain the whole story. A clear explanation doesn't necessarily mean low risk; a unclear explanation certainly indicates high risk. The future isn't about whether no one can buy overseas assets, but rather that the channels will become increasingly tiered. I don't believe that future regulation will simply and crudely suppress all overseas investment demand. This is neither practically feasible nor in line with the global trend of asset allocation for Chinese enterprises and residents. A more likely scenario is a tiered distribution of channels. Compliant funds will continue to utilize licensed securities firms, QDII (Qualified Domestic Institutional Investor) schemes, cross-border wealth management channels, licensed institutions in Hong Kong and Singapore, compliant funds, family offices, and offshore trusts. These pathways are more costly, have higher barriers to entry, require more documentation, and are slower, but at least the source of funds, investment status, tax reporting, and regulatory boundaries are relatively clear. Gray funds, on the other hand, will continue to flow into stablecoins, OTC markets, overseas exchanges, tokenized stocks, on-chain wallets, and offshore accounts. This path is faster, lighter, and more covert, but also more prone to sudden collapses at certain points. What regulators will truly be focusing on next isn't every small individual investment, but rather several more crucial links: domestic marketing entry points, OTC deposits and withdrawals, underground banks, fraudulent trade, commission-based agents, platforms providing unapproved cross-border financial services to domestic residents, and large, high-frequency, and abnormal stablecoin fund flows. Therefore, for individuals, the future question isn't "can we still buy?", but rather: Through which channels do you buy? With what money? Who provides the service? Is your source of funds clean? Have you declared your returns? Have you transferred funds for others? Once asked, can you provide a complete explanation? For platforms, the future isn't as simple as "whether they have an overseas license," but rather: Do they have users in mainland China? Do they offer Chinese-language marketing? Do they have domestic agents? Do they assist with account opening? Do they process transaction orders? Do they facilitate fund transfers? Do they knowingly continue to provide targeted services despite a large number of domestic users? These questions will determine whether a platform is engaged in global financial innovation or what Chinese regulators consider illegal cross-border business. Finally, looking at the phenomenon of using stablecoins to buy US stocks, while seemingly a product innovation, it actually represents a new conflict between the global asset allocation needs of Chinese residents and the regulatory boundaries of capital account transactions. The crackdown on older cross-border brokerages is only the first half. The replacement of stock trading by cryptocurrency exchanges is the more complex second half. This is because this time, funds are no longer simply flowing from banks to brokerages, but from RMB to stablecoins, from stablecoins to overseas markets, and then back to the blockchain. The more convenient this path, the more attractive it will be; the more bustling this path, the more it will attract regulatory attention. Between wealth opportunities and regulatory boundaries, stablecoins have opened an underground highway. The fastest runner isn't necessarily the first to reach the destination; they might also be the first to hit the obstacles.