China has launched a fresh and aggressive crackdown on virtual currencies, tightening its long-standing restrictions and placing stablecoins directly in its crosshairs as regulators move to reinforce control over the country’s financial system.
The People’s Bank of China (PBOC), after a high-level regulatory meeting held on 29 November, reaffirmed that all cryptocurrency activities remain illegal in mainland China. Officials warned that stablecoins pose “significant financial and security risks,” citing weak identity verification, money-laundering vulnerabilities, and threats to monetary sovereignty.
Regulators said several stablecoin-linked activities have failed to meet China’s anti-money laundering standards, describing many operations as opaque and prone to misuse for illicit transfers. Authorities argued that private digital currencies undermine the state’s monetary authority at a time when China is pushing for dominance of its digital yuan. The move also follows Beijing’s concerns that some financial institutions, particularly in Hong Kong, were deepening their involvement in tokenization and stablecoin projects while mainland regulators maintain a strict ban.
The announcement rattled digital-asset markets almost immediately. Cryptocurrency-related companies listed in Hong Kong recorded sharp losses, including Yunfeng Financial Group, which fell more than 10%. Other firms tied to tokenization and crypto services dropped between 5% and 7%, underscoring how sensitive markets remain to Beijing’s position even as Hong Kong attempts to position itself as a regional digital-asset hub.
Analysts say the crackdown could accelerate a shift toward regulated digital assets, including central bank digital currencies and government-approved stablecoins. China’s hardened stance adds pressure on global regulators to tighten oversight as cross-border digital payments expand. For crypto firms across Asia, the signal is clear: Beijing is not softening its position, and regulators expect stricter transparency, identity verification, and reporting compliance. Attempts to exploit legal gaps are likely to face swift sanctions.
China banned cryptocurrency trading and mining in 2021, but enforcement has intensified whenever authorities believe market activity is creeping back into the system. This latest escalation highlights Beijing’s determination to prevent alternative digital currencies from gaining ground, especially as it expands the digital yuan across major cities.
While the global crypto industry pushes toward mainstream adoption, China remains one of the world’s most restrictive environments, and with stablecoins now explicitly targeted, the space for private digital currencies is even narrower.
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