Pan Gongsheng, Governor of the People's Bank of China, reiterated on October 27, 2025, that China's 2017 regulations on virtual currency trading are still in effect. Despite ongoing crackdowns on illegal crypto activities, a legal debate is emerging as Chinese courts increasingly apply embezzlement laws to offshore Web3 projects. Critics argue this approach contradicts national financial policy and the EU's Markets in Crypto-Assets Regulation, which emphasizes clear legal boundaries. The debate highlights the tension between investor protection and potential overreach into unregulated sectors.