Speculative activities in virtual currencies have resurfaced, the People's Bank of China (PBOC), the country's central bank, said in a statement, reaffirming its tough stance on virtual currencies and “illegal activities” involving stablecoins. The PBOC held a coordination meeting on virtual currency regulation with 12 regulatory and law enforcement agencies. “Business activities related to virtual currencies constitute illegal financial activities,” the statement said. “Stablecoins are a form of virtual currency, and currently cannot effectively meet requirements for customer identification and anti-money-laundering,” it added, warning that they posed risks of being exploited for illegal purposes such as fundraising fraud and unauthorized cross-border fund transfers.
According to the PBOC statement, the authorities emphasized that these currencies did not have the same legal status as fiat currency and “should not and cannot” be used in market circulation, while vowing to quash related illicit activities. Despite a blanket ban on the sector since 2021, bitcoin mining in China has seen an uptick this year, according to industry data, as miners exploit China’s abundant energy supply. China's assertion of its hardline approach to virtual currencies comes as other governments move to formalize the role of stablecoins in the economy. The European Union’s regulatory framework for stablecoins took effect in June last year, while the central bank of the United Arab Emirates (UAE) approved a dirham-pegged stablecoin in December. This year, U.S. President Donald Trump signed the regulatory “Genius Act” into law in July, while Hong Kong’s Stablecoins Ordinance came into force in August. In November, authorities in Japan signaled support for a project by the country’s three largest banks to jointly issue stablecoins.
Meanwhile, Beijing has maintained its cautious stance on decentralized virtual assets, channelling resources instead into promoting the adoption of its central bank sovereign digital currency, the e-CNY. While the application of the digital yuan has been primarily domestic to date, Beijing has aggressively stepped up efforts to deploy it globally as a counterweight to dollar-denominated tokens. PBOC Governor Pan Gongsheng last month reiterated warnings that stablecoins remained in their early stages, noting that speculation surrounding them could erode the monetary sovereignty of less developed economies. Addressing the Financial Street Forum in Beijing, he also pledged to further optimize the digital yuan’s management system and support more commercial banks in joining the network, the South China Morning Post reports.
