The joint issuance of the "Implementation Plan for Comprehensive Rectification of Illegal Cross-border Securities, Futures and Fund Operations" (hereinafter referred to as the "Rectification Plan") by eight departments appears on the surface to be a concentrated cleanup of illegal cross-border securities firms, futures companies, and fund operators by regulatory authorities. Many market interpretations immediately focused on internet brokerages like Futu, Tiger Brokers, and Changqiao, discussing whether they could continue serving domestic users, how existing accounts would be handled, and whether their apps and websites would be shut down. However, interpreting this document solely as a "rectification of cross-border brokerages" underestimates its true significance. The key point of this document is not the fate of any particular platform, but rather that regulators have redrawn the boundaries of cross-border financial services: whether an overseas institution possesses a license is not the end of the matter; the real issue is whether it has obtained regulatory approval within China and whether it is conducting substantive business activities such as marketing and solicitation, account opening, transaction order processing, and fund transfers for investors within China. In other words, overseas licenses cannot automatically penetrate Chinese regulatory boundaries, and internet portals cannot disguise domestic business operations as "overseas services." This is why legal professionals should carefully examine this "Rectification Plan." This is not just an industry cleanup, but more like the formation of a regulatory template: first, confirm the nature of unapproved cross-border business operations; then, cut off key links such as marketing, account opening, trading, and fund transfers; and finally, use a concentrated rectification period to steadily clean up the existing stock. This template is applied to securities, futures, and funds today, and may be used to observe other cross-border financial activities tomorrow, including crypto assets, of course. Note: This article is for academic and policy research purposes only and does not constitute any investment or legal advice. I. What does this document really say? According to the "Rectification Plan," the targets of this round of rectification are not just "cross-border securities firms" in the narrow sense, but also overseas institutions that illegally operate securities, futures, and fund businesses across borders, as well as domestic related or cooperative entities that assist these overseas institutions in their illegal business operations, illegal intermediaries that solicit domestic investors, and internet platforms and online self-media that illegally publish marketing information. In other words, it does not only target the platforms themselves, but includes the entire illegal cross-border business chain in the scope of governance: who directs traffic domestically, who assists in account opening, who provides technical support, who provides customer service, and who helps funds go out will all be placed in the same regulatory network.Specifically, the "Rectification Plan" is very clear on the business aspects: It prohibits overseas institutions from conducting marketing and solicitation activities related to securities, futures, and fund businesses within China; it prohibits providing trading services such as account opening, processing trading instructions, and fund transfers; and it prohibits domestic entities from assisting overseas institutions in illegally conducting marketing or trading services, or providing them with support such as website and trading software development and operation, or customer service. This means that regulation does not only consider where the transaction is ultimately completed, but will dismantle the entire business chain. As long as a link occurs within China, or substantially provides services to domestic investors, it may be considered illegal cross-border operations. More importantly, it addresses existing cases. The document sets a two-year concentrated rectification period. During this period, overseas institutions are prohibited from illegally providing existing investors with services such as buying transactions and transferring funds within China; they are only allowed to conduct one-way selling transactions and transferring funds out. After the rectification period, overseas institutions must completely shut down their domestic websites, trading software, and related services, and are prohibited from continuing to illegally provide trading services to existing investors within China. This arrangement is not a simple "one-size-fits-all" approach, but a typical regulatory cleanup path: preventing new risks while providing an exit window for existing investors. Therefore, the real change in this rectification is not that regulators suddenly discovered problems with cross-border securities firms. The China Securities Regulatory Commission (CSRC) had already begun rectifying illegal cross-border operations by overseas institutions as early as December 30, 2022, prohibiting the illegal solicitation of domestic investors and the opening of new accounts for them. The change in this "Rectification Plan" lies in its further advancement of the previous approach of "curbing new cases and orderly resolving existing ones" to "full-chain governance, concentrated phased exit, and ultimate expulsion from the domestic market." The regulatory logic has shifted from risk warnings to institutionalized clearing. II. Why is this framework important? The most noteworthy aspect of this document is its clearly defined three-element structure: unapproved, cross-border provision, and targeting the domestic market. As long as these three conditions are met, regulators will no longer view it as simply overseas business, nor will they abandon regulation of the domestic环节 simply because the service provider, server, and license are located overseas. This structure is highly replicable. It is not designed for a single platform, nor is it limited to the single scenario of securities account opening. It addresses a more general issue: in the internet environment, overseas financial institutions can easily reach domestic users through apps, websites, social media, agents, account managers, and payment channels; and once domestic investors are recruited, open accounts, place orders, deposit funds, and trade within China, then the so-called "overseas services" are no longer purely overseas services.This is precisely where the regulation of crypto assets can be examined. A long-standing narrative in the crypto asset sector is that platforms are located overseas, servers are overseas, entities are registered overseas, and users merely access the platform independently, therefore it shouldn't be considered a domestic operation. However, judging from the logic of this "Rectification Plan," the focus of regulatory judgment is not on where the institution claims to be located, but on whether it provides identifiable, sustainable, and commercially viable financial services to domestic entities in various ways. Once this judgment method is applied to the crypto asset scenario, it becomes difficult for CEXs providing trading access, Chinese language services, community operations, tutorial referrals, and OTC deposit and withdrawal arrangements to domestic users to be packaged as "overseas activities" completely detached from Chinese regulation. III. Two Steps in Crypto Asset Regulation: Characterization and Channels If the "Rectification Plans" for securities, futures, and funds address "how to govern cross-border activities," then the crypto asset sector has already completed the first layer of characterization. The "924 Notice" of 2021 explicitly stated that virtual currency-related business activities are illegal financial activities, and that overseas virtual currency exchanges providing services to domestic residents via the internet are also illegal financial activities. Although this document was repealed by the Ministry of Finance document No. 42 of 2026 in February 2026, the basic regulatory approach it established has not disappeared. Instead, it has been continued, expanded, and institutionalized by document No. 42. Document No. 42 goes a step further. It not only reiterates that virtual currencies such as Bitcoin, Ethereum, and Tether do not have the same legal status as fiat currency and cannot be used as currency in the market, but also explicitly states that virtual currency-related business activities are illegal financial activities. Activities such as exchanging fiat currency for virtual currency, exchanging virtual currencies among themselves, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services, token issuance financing, and trading virtual currency-related financial products within the territory are all strictly prohibited. More importantly, document No. 42 explicitly states that overseas entities and individuals are prohibited from illegally providing virtual currency-related services to domestic entities in any form. In this way, the regulation of encrypted assets has formed a complete chain: first, defining the nature of the asset and business, and then cutting off channels through overseas services, internet access points, payment settlement, marketing and traffic generation, technical support, and anti-money laundering monitoring. In other words, regulators are not just asking "what is the coin itself?", but rather "who is helping it enter the domestic financial order, and who is helping domestic investors complete the transaction loop?" This is why the current crackdown on cross-border securities, futures, and funds has reference value for crypto assets.Documents from the securities sector tell us that regulation can go beyond just punishing overseas institutions themselves; it can also target domestic assisting entities, internet platforms, social media accounts, bank accounts, foreign exchange audits, underground banks, and other supporting channels. Similarly, Document No. 42 regarding crypto assets emphasizes that financial institutions and non-bank payment institutions are prohibited from providing account opening, fund transfer, clearing and settlement services for virtual currency-related businesses, and internet companies are prohibited from providing online business venues, commercial displays, marketing promotions, paid traffic redirection, and other services for related businesses. Taken together, the regulators are not truly targeting a single app, but rather the service and financial chains behind it. IV. The Gray Area of OTC Is Narrowing. Domestic investors buying crypto assets through OTC has always been in a very delicate position. Regulatory documents do not directly equate simply holding virtual currency by an individual with a crime, but this does not mean that the matching, exchange, collection, issuance, settlement, traffic redirection, customer service, and fund transfer chains surrounding virtual currency are safe. On the contrary, the more stably, repeatedly, and profitably a system can help domestic users convert between fiat currency and virtual currency, the easier it is to slide from "personal transactions" into "business activities." The real risk of OTC trading lies not in a single user's accidental purchase, but in someone acting as a long-term bridge for funds. If an OTC merchant continuously facilitates transactions, charges spreads or service fees, helps users circumvent platform restrictions, cooperates with overseas exchanges to complete deposits and withdrawals, or even uses multiple layers of personal accounts, corporate accounts, underground banks, or fictitious trade backgrounds to complete fund transfers, then it faces not only administrative regulatory risks but also potentially enters the more serious legal risk zones of illegal operations, money laundering, concealing criminal proceeds, and illegal foreign exchange trading. Therefore, "narrowing the channels" is more worthy of attention than "blocking exchanges." Exchanges can change domain names, apps can change installation packages, communities can change code words, and tutorials can change aliases. But once the fund channels are jointly monitored by banks, payment institutions, foreign exchange management, anti-money laundering systems, and public security organs, the friction costs of the entire transaction loop will increase. Regulators don't necessarily need to directly name every OTC merchant; as long as they continuously reduce bank accounts, payment settlements, foreign exchange outflows, internet traffic redirection, and domestic assistance services, the gray area will naturally narrow. This is also the biggest lesson the "Rectification Plan" offers to the crypto asset sector. Regulation doesn't just target the front end or only overseas entities; it addresses domestic entry points, domestic facilitators, and domestic funding channels all together. This applies to cross-border securities firms, and it will also apply to crypto assets.As long as cross-border financial services still require domestic users, domestic traffic, domestic payments, and domestic support, they cannot completely escape the scrutiny of domestic regulators. V. Conclusion: Not a sudden tightening, but a continued narrowing of the loopholes. Therefore, the eight-department crackdown on illegal cross-border securities, futures, and fund operations is not the starting point for cryptocurrency regulation, nor does it signify a sudden shift in regulatory logic. It is more like a confirmation signal: the governance of cross-border financial activities is shifting from single-point penalties to chain governance; from simply targeting overseas platforms to simultaneously addressing domestic assisting entities, internet access points, bank accounts, foreign exchange channels, and investor protection. For crypto assets, the 924 Notice in 2021 completed the first strong characterization, and Document No. 42 in 2026 completed the update and expansion. This crackdown on cross-border securities, futures, and funds provides a clearer frame of reference: unapproved, cross-border provision, and targeting the domestic market—as long as this structure exists, regulators will not only look at whether you have an overseas license, nor only at where your servers are located, nor will they acknowledge that a service access point is inherently outside of regulation simply because it is cloaked in the guise of the internet. The gray area for CEXs is already very narrow. It has a clearly defined operating entity, an account system, transaction matching, customer service and marketing, fiat currency deposit and withdrawal needs, and various entry points for domestic users. What truly complicates the enforcement boundaries is DeFi. Decentralized protocols lack the traditional centralized account opening process and may not have a clear operating entity or customer service system, making regulation more difficult. However, this doesn't mean DeFi is completely outside of regulation; it simply shifts the regulatory focus from "targeting platforms" to "targeting the front end, entry points, funds, and identifiable entities." Therefore, the question isn't "has regulation suddenly become stricter?" A more accurate statement is that regulation has been progressing in the same direction, with each document patching up the gaps left by the previous round. The 924 Notice patched the qualitative aspects, Document No. 42 patched the scope and responsibility chain, and the "Rectification Plan" presents a comprehensive approach to clearing out cross-border financial activities. Note: a. This article is for academic exchange and reference only. b. The views expressed in this article do not necessarily represent the position of this institution or official account, nor should they be considered legal advice or investment advice. c. For copyright issues, please contact us via email: [email protected]. d. Generative artificial intelligence technology was used carefully and appropriately in the data compilation and writing process of this article. e. Thank you for your attention and understanding!