Key Highlights
- China warns stablecoins aren’t legal money and tightens crypto rules to prevent fraud, money laundering, and financial instability.
- Regulators halt stablecoin research and offshore tokenization, aiming to reduce speculation and keep investor activity under control.
- Despite bans, Bitcoin mining rebounds in China, driven by cheap electricity, with the country now controlling about 14% of global mining.
China has warned that stablecoins are not official money and cannot be used like regular currency. Yesterday, the People’s Bank of China (PBOC) convened a high-level meeting with representatives from state agencies, courts, and financial regulators to discuss virtual currency speculation.
According to the official release, the meeting focused on the growing risks from virtual currencies, especially stablecoins. Officials said that although past crackdowns reduced illegal trading, speculation is rising again, creating new financial risks.
The bank reminded that virtual currencies are not official money and cannot be used like regular cash. Stablecoins, in particular, don’t meet rules for identifying users or preventing money laundering, which means they could be used for fraud or illegal cross-border transfers.
Tighter regulations and market oversight
Authorities called for the strict implementation of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, pushing the regulators to continue banning virtual currencies. The PBOC and other bodies will be focusing on better coordination with each other through information sharing and monitoring of capital flows.
Regulators also sought to crack down on illicit activities, shield investors’ assets, and ensure that the system sustains financial stability. They also stressed the need for an upgrade in crypto-related activities’ legal frameworks.
Besides domestic measures, regulators recently instructed major brokerages to halt stablecoin research and cancel related events. This move seeks to curb growing domestic interest and prevent uninformed investments.
Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp in Singapore, noted, “Chinese policymakers prefer to keep financial discussions calm to avoid herd behaviour.” The approach reflects China’s broader caution in preventing market volatility linked to speculative trends.
Impact on Hong Kong and real-world asset tokenization
China is also keeping a close watch on Hong Kong. In September, regulators told local brokerages to pause tokenizing real-world assets. At least two major brokerages were advised not to carry out these activities overseas.
Meanwhile, Hong Kong has been trying to establish itself as a digital asset hub in Southeast Asia. Its Financial Services and Treasury Bureau and the Hong Kong Monetary Authority are reviewing RWA tokenization rules, drawing on international standards.
Mining resurgence despite regulatory pressure
It is worth noting that Bitcoin mining is gradually returning to China despite the 2021 ban. Provinces like Xinjiang offer cheap electricity, prompting both small and large miners to resume operations.
Wang, a private miner in Xinjiang, said, “A lot of energy cannot be transmitted out of Xinjiang, so you consume it in the form of crypto mining. New mining projects are under construction. People mine where electricity is cheap.” Consequently, China now controls roughly 14% of global mining as of October 2025, marking a notable rebound.
However, with China taking a strict stance on unregulated digital currencies, investors should be cautious as regulations on stablecoins and offshore crypto activities tighten. The focus remains on maintaining financial stability and preventing illegal activity.
