The central bank sets a major tone on stablecoins for the first time—where will the market go next?

Author: Cai Pengcheng, TMTPost

Editor: Liu Yangxue, TMTPost

 

On November 29, the People’s Bank of China officially released an article titled "Meeting of the Coordination Mechanism for Cracking Down on Virtual Currency Trading and Speculation," providing the latest statements on virtual currencies and stablecoins.

The article provided the latest definition of stablecoins: “Stablecoins are a form of virtual currency. At present, they cannot effectively meet requirements such as customer identification and anti-money laundering, and there are risks of being used for illegal activities such as money laundering, fundraising fraud, and illegal cross-border fund transfers.” 

A well-known WEB 3 industry lawyer told Barron’s China, “Stablecoins are a form of virtual currency. This is the first time the authorities have clearly defined stablecoins in an official document and directly included them in the regulatory framework of ‘illegal financial activities involving virtual currencies.’ This basically negates all discussions about stablecoins in mainland China.”

He added that this statement will not directly impact the Hong Kong stablecoin market, but will have indirect effects, as mainland institutions will be more cautious and low-key in entering the Hong Kong stablecoin sector.

The full text is as follows:

On November 28, 2025, the People’s Bank of China held a meeting of the coordination mechanism for cracking down on virtual currency trading and speculation. Officials from the Ministry of Public Security, the Cyberspace Administration of China, the Central Financial Office, the Supreme People’s Court, the Supreme People’s Procuratorate, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Justice, the People’s Bank of China, the State Administration for Market Regulation, the National Financial Regulatory Administration, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange attended the meeting.

The meeting pointed out that in recent years, all departments have earnestly implemented the decisions and deployments of the CPC Central Committee and the State Council, and in accordance with the requirements of the "Notice on Further Preventing and Handling the Risks of Virtual Currency Trading and Speculation" jointly issued by ten departments including the People’s Bank of China in 2021, have resolutely cracked down on virtual currency trading and speculation, rectified the chaos in the virtual currency market, and achieved significant results. Recently, due to various factors, speculation in virtual currencies has resurged, and related illegal and criminal activities have occurred from time to time, presenting new situations and challenges for risk prevention and control.

The meeting emphasized that virtual currencies do not have the same legal status as legal tender, do not have legal compensation, and should not and cannot be used as currency in the market. Business activities related to virtual currencies are illegal financial activities. Stablecoins are a form of virtual currency. At present, they cannot effectively meet requirements such as customer identification and anti-money laundering, and there are risks of being used for illegal activities such as money laundering, fundraising fraud, and illegal cross-border fund transfers.

The meeting required all departments to adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as guidance, fully implement the spirit of the 20th CPC National Congress and all plenary sessions of the 20th Central Committee, make risk prevention and control the eternal theme of financial work, continue to uphold the prohibitive policy on virtual currencies, and continue to crack down on illegal financial activities related to virtual currencies. All departments should deepen coordination and cooperation, improve regulatory policies and legal basis, focus on key links such as information flow and capital flow, strengthen information sharing, further enhance monitoring capabilities, severely crack down on illegal and criminal activities, protect the property safety of the people, and maintain the stability of economic and financial order.

As mentioned in the article above, since the beginning of this year, fundraising fraud cases under the guise of stablecoins have occurred frequently. Financial regulatory authorities in Shenzhen, Beijing, Suzhou, Zhejiang, and other places have intensively issued risk warnings, alerting the public to illegal financial activities using “stablecoins” and other emerging concepts as gimmicks. Ant Group and JD.com have also publicly refuted rumors about stablecoin scams involving their companies.

In recent months, discussions and events related to stablecoins have been very active. The following is an incomplete summary:

In June this year, several internet giants and listed companies announced plans to apply for stablecoin licenses in Hong Kong. On June 18, Pan Gongsheng, Governor of the People’s Bank of China, delivered a keynote speech at the 2025 Lujiazui Forum, stating the following about stablecoins:

“Emerging technologies such as blockchain and distributed ledgers have driven the vigorous development of central bank digital currencies and stablecoins, realizing ‘payment as settlement,’ fundamentally reshaping the traditional payment system from the ground up, and greatly shortening the cross-border payment chain. At the same time, they also pose huge challenges to financial regulation. Technologies such as smart contracts and decentralized finance will also continue to drive the evolution and development of cross-border payment systems.”

On July 10, the Shanghai State-owned Assets Supervision and Administration Commission Party Committee held a central group study session, focusing on the development trends and response strategies of cryptocurrencies and stablecoins. In the same month, financial regulatory authorities in many places intensively issued risk warnings involving stablecoins.

On August 1, Hong Kong’s “Stablecoin Ordinance” officially came into effect, providing a clear regulatory framework and license application path for stablecoin issuers. In the same month, foreign media cited sources saying that China is considering, for the first time, allowing the use of RMB-backed stablecoins to promote wider global use of the RMB.

On October 27, at the 2025 Financial Street Forum Annual Conference, Pan Gongsheng stated that international financial organizations and financial regulatory authorities such as central banks generally hold a cautious attitude toward the development of stablecoins. Pan Gongsheng mentioned that at the annual meetings of the International Monetary Fund (IMF) and the World Bank, stablecoins and their potential financial risks became one of the most discussed topics among finance ministers and central bank governors from various countries. The general consensus is that, as a financial activity, stablecoins currently cannot effectively meet basic requirements such as customer identification and anti-money laundering, amplifying global regulatory loopholes such as money laundering, illegal cross-border fund transfers, and terrorist financing. The market atmosphere is highly speculative, increasing the vulnerability of the global financial system and impacting the monetary sovereignty of some less developed economies.

From a global perspective, on November 7, Japanese officials stated that the Japanese government has decided to support a project jointly launched by Japan’s three major banks to issue stablecoins. Japanese startup JPYC launched the world’s first yen-backed stablecoin, with a fixed exchange rate of 1 JPYC to 1 yen, using yen deposits and Japanese government bonds as supporting assets for the yen stablecoin. Previously, in September, nine European banks (including ING, KBC, and Danske Bank) formed a euro stablecoin consortium, planning to issue a regulated euro-pegged stablecoin for cross-border payments. In July, Trump swiftly signed the Genius Act, establishing a regulatory framework for stablecoins.

 

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