China Reasserts Tough Controls on Virtual Currencies as Stablecoin Risks Draw Fresh Scrutiny

The People’s Bank of China warns of rising crypto speculation and pledges stronger enforcement measures to safeguard financial stability amid growing concerns over stablecoin activity.

China’s central bank has reiterated its firm position on virtual currencies, emphasizing that renewed speculative behavior in the crypto market is creating fresh regulatory challenges.

The People’s Bank of China issued a detailed statement following a recent coordination meeting focused on tightening oversight of digital asset activities across the country.

According to the central bank, recent market movements and external influences have contributed to a noticeable increase in virtual currency speculation.

Officials said this rise underscores the need for stronger and more coordinated measures to control emerging risks that could affect broader economic stability.

The bank reaffirmed that virtual currencies do not share the same legal standing as traditional fiat currency and cannot be used as official payment methods in the Chinese market.

Authorities stressed that business activities involving virtual currencies fall outside the scope of legal financial operations and are considered unlawful under current regulations.

A major area of concern highlighted during the meeting was the growing use of stablecoins, which the central bank said fail to meet essential requirements for customer identity verification and anti-money-laundering safeguards.

Officials noted that the characteristics of stablecoins make them vulnerable to misuse in financial crimes and unauthorized cross-border fund transfers.

The People’s Bank of China warned that stablecoins could be exploited for activities such as fraud, money laundering, and other illegal financial operations due to their structure and the anonymity they can provide.

To address these risks, the bank pledged to intensify enforcement actions and expand regulatory coordination across multiple financial and cybersecurity agencies.

The central bank said it will continue strengthening its monitoring of both domestic and international developments relating to stablecoins.

Authorities plan to closely follow global regulatory trends to ensure domestic controls remain aligned with evolving risks and international standards.

In earlier remarks, PBOC Governor Pan Gongsheng emphasized the importance of maintaining strict oversight on virtual currency trading and operations within China.

He said the central bank will continue evaluating global stablecoin developments while actively suppressing speculative activity in the domestic market.

Although China maintains a sweeping ban on cryptocurrency trading and associated financial services, the broader environment surrounding digital assets continues to shift globally.

Hong Kong has established a regulatory regime for stablecoin issuers, though no official licenses have been granted so far, signaling a cautious regional approach to digital asset regulation.

Despite the nationwide prohibition on crypto trading and mining introduced several years ago, reports indicate that Bitcoin mining activity is quietly re-emerging in certain regions of China.

Miners are said to be taking advantage of low electricity prices and an expanding data-center infrastructure to operate discreetly despite the ongoing ban.

Industry observers note that China’s renewed emphasis on enforcement reflects a broader determination to prevent financial instability linked to digital asset markets.

Policymakers continue to express concerns that unauthorized virtual currency operations may threaten the integrity of China’s financial system if left unchecked.

The central bank reiterated that maintaining economic and financial stability remains its highest priority as new forms of digital finance continue to evolve worldwide.

Officials said that China intends to stay proactive in addressing risks posed by rapidly changing technologies and speculative digital assets.

Further regulatory actions are expected as authorities seek to close loopholes and ensure compliance with national policies governing financial conduct and digital activity.

The bank stressed that safeguarding public interests and the overall financial system will guide future strategies and enforcement efforts.