The People's Bank of China stressed that digital assets have no legal status and warned that stablecoins threaten financial security after an inter-ministerial meeting with 13 state agencies.
China's central bank delivered its toughest message since the 2021 ban at an inter-ministerial meeting in Beijing on Friday. The People's Bank of China said virtual currencies do not have the same legal status as fiat currencies, are not recognized as legal means of payment and cannot be used as currencies in the market. It vowed to crack down on illegal activities and related crimes.
The meeting, attended by representatives from thirteen government agencies, was held amid the resurgence of speculative activities in digital assets in the market. The central bank said that a comprehensive crackdown on trading and mining activities since September 2021 has rectified the chaos and achieved remarkable results.
Stablecoins become the target of intense scrutiny
The statement specifically highlighted the risks of stablecoins, saying they do not meet customer identity verification and anti-money laundering standards. The People's Bank of China warned that stablecoins pose serious risks including money laundering, fraudulent Capital , illegal cross-border transfers and underground payments, which directly threaten national financial security.
This view was reinforced by remarks by former Governor Zhou Xiaochuan at a closed-door conference in July, who stressed the need to be vigilant about the risk of stablecoins being misused for speculative assets, as misalignment could lead to fraud and destabilize the financial system. Mr. Zhou led the central bank from 2002 to 2018.
While mainland China has maintained a hardline stance, Hong Kong has pursued a more open path through licensing mechanisms for exchanges and stablecoin issuers. But Beijing has begun to tighten some of its grip on the territory, ordering major brokerages to halt real-asset Tokenize projects in September and blocking tech companies from issuing their own stablecoins in October.
Meanwhile, the People's Bank of China continues to push ahead with its digital yuan pilot program, with more than 225 million personal wallets opened, demonstrating its strategy of tightly controlling the digital currency ecosystem under the state's centralized model.
