China’s Central Bank Intensifies Warning on Stablecoins
China’s central bank has heightened its caution regarding stablecoins, emphasizing a stringent stance on domestic cryptocurrency activities. Governor Pan Gongsheng articulated that the proliferation of privately issued “virtual currencies,” especially stablecoins, reveals significant deficiencies in global financial regulation and heightens systemic risks. During the 2025 Financial Street Forum in Beijing on October 27, Pan noted that while stablecoins remain in their nascent phase, they are already exacerbating regulatory oversights across borders and threatening monetary sovereignty in vulnerable economies.
China Reinforces Its Stance on Crypto Regulation
Pan’s comments were rooted in the discussions that took place at the IMF/World Bank Annual Meetings in Washington, which occurred just ten days prior. He conveyed that the consensus among financial ministers and central bank leaders was that stablecoins, “as a financial activity, at this stage cannot effectively meet basic requirements in customer identification and anti-money-laundering,” thus “magnifying loopholes in global financial regulation.” This situation fuels “speculative hype,” increases the “fragility of the global financial system,” and undermines the monetary sovereignty of less developed nations.
Commitment to Ongoing Domestic Enforcement
The governor reinforced a robust domestic enforcement approach, stating, “Since 2017, the People’s Bank of China, together with relevant departments, has issued multiple policy documents to prevent and deal with risks from domestic crypto trading and speculation, and these documents remain effective.” He added that the PBOC will collaborate with law enforcement agencies to persist in its crackdown on cryptocurrency operations and speculation within China, aiming to preserve economic and financial stability while continuously monitoring the evolution of offshore stablecoins.
Stablecoins and Cross-Border Commerce Dynamics
Pan’s remarks come at a time when stablecoins have increasingly integrated into cross-border trade and the broader cryptocurrency market, with dollar-pegged tokens leading global transaction volumes. Additionally, these comments coincide with ongoing policy discussions in China about the potential acceptance of offshore yuan-linked instruments to supplement the official digital currency, e-CNY. Over the summer, significant Chinese tech companies urged the PBOC to permit an offshore, yuan-based stablecoin in Hong Kong to challenge the dominance of US dollar-pegged stablecoins—an initiative that, if sanctioned, would likely be insulated from the mainland’s prohibitions.
Implications for Market Participants
For stakeholders in the market, the implications are twofold. Firstly, there is no sign of a policy relaxation concerning crypto trading or mining: the regulatory framework established between 2017 and 2021 remains firmly in place, and enforcement is set to be coordinated with law enforcement agencies. Secondly, Chinese officials are intensifying their scrutiny of offshore stablecoins utilized by exporters, importers, and savers, an area that has expanded as stablecoins become prevalent as settlement mediums in various parts of Asia and emerging markets.
Future Government-Driven Developments
The central bank’s phrasing—“continue cracking down” domestically while “dynamically evaluating” offshore developments—indicates that any future experimentation with stablecoins will likely occur through official government channels rather than through market-driven initiatives. As of now, the overall cryptocurrency market capitalization is reported to be $3.84 trillion, with the total crypto market cap remaining above the 1.272 Fib level on the one-week chart.
