BEIJING — The People’s Bank of China (PBOC) has issued a stark reaffirmation of its strict prohibition on digital asset operations, explicitly targeting stablecoins as a threat to national financial security. The central bank’s latest directive follows a high-level meeting involving 13 government agencies, convened in response to what officials described as a “resurfacing” of speculative activity in the virtual currency markets.
Reaffirming the “Illegal” Status
In its most forceful public statement since the landmark ban in September 2021, the PBOC emphasized that virtual currencies “do not have the same legal status as fiat currencies” and categorically lack legal tender status. The central bank stated that digital assets “should not and cannot be used as currency in the market,” warning that it would “severely crack down on illegal and criminal activities” related to the sector.
The PBOC noted that its previous sweeping bans on trading and mining had successfully “rectified the chaos in the virtual currency market.” However, the involvement of multiple government agencies in Friday’s meeting suggests a renewed urgency to extinguish lingering or reviving crypto activities within the mainland.
Stablecoins Under Scrutiny
A significant portion of the central bank’s warning was directed at stablecoins—cryptocurrencies designed to minimize volatility by pegging their value to an asset like the US dollar. The PBOC identified stablecoins as a specific vector for financial risk, stating that they often fail to meet standard Know-Your-Customer (KYC) and Anti-Money Laundering (AML) requirements.
The regulator flagged potential dangers associated with stablecoins, including:
Money laundering
Fraudulent fundraising
Illegal cross-border transfers
Underground payment processing
Former PBOC governor Zhou Xiaochuan echoed these sentiments in a closed-door seminar in July, warning that a “deviation in direction” regarding stablecoins could trigger instability in the financial system.
The Mainland vs. Hong Kong Divergence
The PBOC’s hardened stance highlights the growing regulatory divergence between mainland China and Hong Kong. While Beijing maintains a total ban, Hong Kong has actively courted the crypto industry, establishing licensing regimes for exchanges and stablecoin issuers to position itself as a digital asset hub.
However, Beijing’s influence remains palpable. Recent reports indicate that Chinese regulators have exerted pressure on mainland tech giants to halt stablecoin issuances in Hong Kong and have instructed brokerages to pause real-world asset tokenization efforts.
Push for the Digital Yuan
As it suppresses private cryptocurrencies, the PBOC continues to aggressively promote its own Central Bank Digital Currency (CBDC), the digital yuan (e-CNY). The pilot program has reportedly seen the opening of over 225 million personal wallets, underscoring the government’s preference for state-controlled digital finance over decentralized alternatives.
With this latest multi-agency coordination, China appears determined to close any remaining loopholes for crypto participation, ensuring that its financial system remains insulated from the volatile digital asset market.
