China’s central bank has reaffirmed its blanket ban on cryptocurrency operations and issued a heightened warning about the risks posed by stablecoins, underscoring Beijing’s commitment to state control over digital finance.
The People’s Bank of China (PBoC) declared that digital assets lack the legal status of fiat currencies and should not be used as a means of payment. This pronouncement follows a resurgence of speculative crypto activities within China, prompting concern among financial authorities.
The PBoC highlighted that stablecoins, in particular, fall short of basic regulatory standards, including customer identification (KYC) and anti-money laundering (AML) protocols. The bank sees them as direct threats to national financial security.
Officials specified risks such as illegal cross-border transfers, fraudulent fundraising schemes, and the operation of underground payment systems facilitated by stablecoins. This marks one of China’s most stringent official stances on stablecoins to date.
The announcement reinforces a firm regulatory contrast with Hong Kong, which has moved to embrace a licensing framework for cryptocurrency exchanges and stablecoin issuers.
Despite Hong Kong’s more open approach, reports indicate that Beijing has recently influenced crypto developments within the special administrative region. This includes pressuring brokers to halt asset tokenization projects and curbing initiatives by major Chinese tech firms related to stablecoins.
In parallel with its crackdown on private digital assets, the PBoC continues to aggressively promote the digital yuan, its central bank digital currency. Over 225 million personal wallets have been opened for its use, demonstrating Beijing’s goal of maintaining state control over the evolution of digital money.
The PBoC also noted that its comprehensive prohibition on crypto trading and mining, imposed in September 2021, successfully “rectified market chaos” and yielded “significant results.”
Further backing the central bank’s position, Zhou Xiaochuan, a former PBoC governor from 2002 to 2018, warned in July about potential risks associated with stablecoin adoption.
Zhou cautioned that excessive use of these instruments in asset speculation could lead to fraud and systemic instability if their growth is not properly managed. This view is consistent among Chinese financial authorities who believe stablecoins can exacerbate structural financial problems without strict oversight.