The central bank has made its first significant statement on stablecoins; where will the market go?
This statement will not directly affect the Hong Kong stablecoin market, but it will have an indirect impact, as mainland institutions will enter the Hong Kong stablecoin market more cautiously and discreetly.Author: Cai Pengcheng, Titanium Media
Editor: Liu Yangxue, Titanium Media
On November 29, the People's Bank of China officially released an article titled "Meeting of the Coordination Mechanism for Combating Speculation in Virtual Currency Transactions," which provided the latest discussion on virtual currencies and stablecoins.
The article provided the latest positioning on stablecoins, stating, "Stablecoins are a form of virtual currency that currently cannot effectively meet requirements for customer identity verification, anti-money laundering, and other aspects, and there is a risk 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 mentioned to Barron's Chinese website, "Stablecoins are a form of virtual currency. This is the first time the official has clearly defined stablecoins in a formal document and directly included them in the regulatory framework of 'illegal financial activities involving virtual currencies.' This basically negates various discussions about stablecoins in mainland China."
He added that this statement would not directly affect the stablecoin market in Hong Kong but would have an indirect impact, as mainland institutions would be more cautious and low-key in entering the Hong Kong stablecoin market.
The full text is as follows:
On November 28, 2025, the People's Bank of China held a meeting of the Coordination Mechanism for Combating Speculation in Virtual Currency Transactions. Officials from the Ministry of Public Security, the Central Cyberspace Affairs Commission, 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, various units have earnestly implemented the decisions and deployments of the Party Central Committee and the State Council, and in accordance with the requirements of the "Notice on Further Preventing and Handling Risks of Speculation in Virtual Currency Transactions" jointly issued by the People's Bank of China and ten other departments in 2021, have resolutely cracked down on speculation in virtual currency transactions, rectified the chaos in virtual currencies, and achieved significant results. Recently, due to various factors, speculation in virtual currencies has risen, and related illegal activities have occurred from time to time, posing new challenges and risks 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 circulated and used as currency in the market. Activities related to virtual currencies are considered illegal financial activities. Stablecoins are a form of virtual currency that currently cannot effectively meet requirements for customer identity verification, anti-money laundering, and other aspects, and there is a risk of being used for illegal activities such as money laundering, fundraising fraud, and illegal cross-border fund transfers.
The meeting required all units to adhere to Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era as guidance, fully implement the spirit of the 20th National Congress of the Communist Party of China and the previous plenary sessions, regard risk prevention and control as 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 units should deepen cooperation, improve regulatory policies and legal bases, focus on key links such as information flow and capital flow, strengthen information sharing, further enhance monitoring capabilities, severely crack down on illegal activities, protect the property safety of the people, and maintain the stability of the economic and financial order.
As mentioned in the article above, since the beginning of this year, there have been frequent cases of fundraising fraud disguised as stablecoins. Financial regulatory agencies in Shenzhen, Beijing, Suzhou, Zhejiang, and other places have issued risk warnings, alerting to illegal financial activities using "stablecoins" and other emerging concepts as a gimmick. Companies such as Ant Group and JD.com have also publicly refuted stablecoin fraud incidents involving their companies.
In recent months, discussions and events regarding stablecoins have been very active, and the following is an incomplete summary:
In June of 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, mentioning stablecoins:
"Emerging technologies such as blockchain and distributed ledgers have driven the vigorous development of central bank digital currencies and stablecoins, achieving 'payment equals settlement,' fundamentally reshaping the traditional payment system, significantly shortening the cross-border payment chain, while also posing significant challenges to financial regulation. Technologies such as smart contracts and decentralized finance will continue to drive the evolution and development of the cross-border payment system."
On July 10, the Party Committee of the Shanghai State-owned Assets Supervision and Administration Commission held a study session focusing on the development trends and response strategies of cryptocurrencies and stablecoins. In the same month, financial regulatory agencies in multiple regions issued risk warnings related to stablecoins.
On August 1, Hong Kong's "Stablecoin Ordinance" officially took effect, providing a clear regulatory framework and licensing application path for stablecoin issuers. In the same month, foreign media cited sources stating that China is considering allowing the use of RMB-backed stablecoins for the first time to promote the broader use of the RMB globally.
On October 27, Pan Gongsheng stated at the 2025 Financial Street Forum Annual Meeting that international financial organizations and central banks generally hold a cautious attitude towards the development of stablecoins. Pan Gongsheng mentioned that at the annual meetings of the International Monetary Fund (IMF) and the World Bank, stablecoins and the potential financial risks they pose became one of the most discussed topics among finance ministers and central bank governors, with a common viewpoint focusing on the fact that stablecoins, as a financial activity, currently cannot effectively meet basic requirements for customer identity verification, anti-money laundering, and other aspects, amplifying global financial regulatory loopholes, such as money laundering, illegal cross-border fund transfers, and terrorist financing, creating a strong atmosphere of market speculation, increasing the vulnerability of the global financial system, and impacting the monetary sovereignty of some underdeveloped economies.
From a global perspective, on November 7, the Japanese government announced its decision to support a project launched by Japan's three major banks to issue stablecoins. The Japanese startup JPYC launched the world's first stablecoin backed by the yen, with a fixed exchange rate of 1 JPYC to 1 yen, supported by yen deposits and Japanese government bonds. 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 quickly signed the Genius Act, establishing a regulatory framework for stablecoins.
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