Summary
Chinese regulators have reportedly ordered firms to cancel stablecoin events and halt related research. The clampdown comes as concerns grow that local hype is fueling fraud and misleading promotions. Despite the clampdown, insiders say China is still exploring a yuan-pegged stablecoin to counter the U.S. dollar’s dominance.
According to an August 8 Bloomberg report, financial regulators in China have instructed companies to cancel seminars and halt all research publications related to stablecoins. Citing people familiar with the matter, the report claims that the crackdown comes amid fears that stablecoins could be exploited as a new tool for fraudulent activities. While authorities are yet to publicly issue a statement, the report comes on the heels of a July 7 warning by the Shenzhen Municipal Task Force for Preventing and Combating Illegal Financial Activities, indicating that crypto-related terms like stablecoins were being misused for malicious purposes.
As ethdaily.net reported at the time, authorities warned that unauthorized entities were leveraging the growing buzz around the potential launch of yuan-backed digital assets to promote shady investment schemes, run illegal fundraising events, and exploit citizens.
But despite the concerns, China’s stablecoin push still appears to be in motion behind the scenes.
China catches stablecoin FOMO
A recent Financial Times report revealed that insider talks for a potential stablecoin launch are growing in China, particularly as the government seeks means to offset the U.S. dollar’s dominance in the global markets. Officials are reportedly seeking expert input on how best to issue and implement stablecoins pegged to the renminbi. The long-running strict regulatory stance on the industry, including a blanket ban on local crypto operations, is also suspected to be easing, with regulators said to be reevaluating their broader stance on digital assets.
Much of the shift comes amid growing acceptance of the asset class in regions like Hong Kong and the United States, following landmark developments like the U.S. GENIUS legislation and Hong Kong’s rollout of its stablecoin ordinance. China-based tech firms like JD.com and Ant Group are also said to be actively lobbying the People’s Bank of China (PBOC) to authorize the issuance of stablecoins, stressing their urgent need to support the currency’s international use.
Meanwhile, China is ramping up efforts on a parallel front, developing its own central bank digital currency called the digital yuan, or e-CNY. Earlier this year, PBOC Governor Pan Gongsheng said that the country plans to establish an international operations center for the currency in Shanghai, reiterating Beijing’s vision of a “multi-polar” global currency system that isn’t overly reliant on the dollar.
For now, there’s no official confirmation on if or when a yuan-backed stablecoin will launch. But the reported growing internal interest, paired with signs of easing regulations, suggests the country’s appetite for digital assets is growing.