The People’s Bank of China (PBOC) has reinforced its uncompromising stance on cryptocurrency within its borders, with Governor Pan Gongsheng issuing a stern warning about the mounting risks associated with stablecoins. Speaking at the 2025 Financial Street Forum in Beijing, Pan highlighted how the proliferation of privately issued digital currencies, particularly stablecoins, is exposing regulatory blind spots and amplifying vulnerabilities in the global financial system.
According to the governor, stablecoins remain in a formative phase, yet their cross-border usage has already begun to challenge regulatory frameworks and undermine monetary sovereignty in emerging economies. Pan emphasized that these digital assets are increasingly being used without adequate mechanisms for customer identification and anti-money laundering (AML), making them a vehicle for financial crime and speculative bubbles.
Pan’s remarks echoed key discussions from the recent IMF and World Bank Annual Meetings in Washington, where global financial leaders collectively expressed concern that stablecoins, in their current form, fail to meet essential legal and compliance standards. These shortcomings, he argued, not only fuel speculative behavior but also jeopardize financial stability and threaten the monetary authority of nations with less robust economic systems.
Reiterating China’s internal policy, Pan made it clear that the crackdown initiated in 2017 remains firmly in place. “The PBOC, alongside relevant authorities, has issued multiple directives targeting domestic crypto speculation and trading. These regulations remain effective today,” he stated. “Our next steps will involve close coordination with law enforcement to suppress illegal crypto activities, safeguard financial order, and monitor developments related to offshore stablecoins.”
This position underscores China’s dual-pronged approach: maintaining strict domestic prohibition while increasing vigilance over offshore instruments that may interact with Chinese markets or citizens. The PBOC has indicated that any potential use of stablecoins linked to the yuan will be subject to tight governmental control and will not emerge from private sector initiatives.
In recent months, large Chinese technology firms have pushed for the introduction of a yuan-based stablecoin in Hong Kong. The proposal aims to counterbalance the dominance of U.S. dollar-pegged tokens in global trade, particularly in Asia. However, any such initiative, if approved, would likely be confined to offshore use and insulated from the mainland’s strict policies.
Pan’s message to the market is unequivocal: there is no softening of China’s domestic crypto policy. The regulatory framework established between 2017 and 2021 remains entrenched, and enforcement is now being enhanced through greater coordination with public security bodies. Meanwhile, the PBOC is closely observing the use of stablecoins in international trade and savings, especially in regions where these assets are becoming default settlement tools.
The increased scrutiny of stablecoins suggests that while China remains skeptical of decentralized crypto assets, it is not blind to the potential strategic leverage of digital currencies in global finance. However, any experimentation will be conducted under state supervision and aligned with the broader goals of economic security and currency sovereignty.
As of now, the global cryptocurrency market capitalization stands at $3.84 trillion, with stablecoins playing an outsized role in liquidity provision and cross-border settlement. Despite their growing utility, regulators worldwide—China included—are becoming increasingly wary of their unregulated expansion.
China’s hardline approach contrasts sharply with that of other countries exploring regulatory sandboxes and pilot programs for stablecoins and central bank digital currencies (CBDCs). While nations like the U.S., UK, and Singapore are cautiously integrating digital assets into their financial systems, China has chosen to prioritize control and oversight through its state-backed digital yuan (e-CNY), which is already in trial phase across several regions.
Furthermore, China’s position reflects broader geopolitical concerns. The widespread use of dollar-backed stablecoins in developing countries poses a challenge to monetary independence and could reinforce dollar hegemony. By curbing such developments domestically and proposing alternatives under state control, Beijing is attempting to insulate its economy from foreign influence while asserting its digital monetary strategy.
Another critical dimension is cybersecurity and consumer protection. As crypto scams and security breaches continue to rise globally, Chinese authorities argue that strict regulation is essential to protect citizens from financial fraud and to prevent capital flight through unregulated digital channels.
In addition to financial concerns, the environmental impact of crypto mining is another reason China remains wary of digital assets. The country was once the epicenter of Bitcoin mining, but the government banned the practice in 2021 due to its massive energy consumption and carbon footprint. Reinforcing this stance, the PBOC’s current policy direction leaves little room for reprisal in mining activities.
Looking ahead, China’s policy signals suggest that any digital currency integration will be carefully orchestrated through government infrastructure. The e-CNY, as China’s flagship CBDC project, is expected to play a central role in digital payments and could be expanded for international use through state agreements and pilot cross-border platforms.
In conclusion, while the global crypto ecosystem continues to evolve, China remains firmly committed to a regulatory-first approach. The message from the central bank is clear: privately issued stablecoins are viewed as a threat to both financial stability and national sovereignty, and their usage will be tightly controlled. For investors and businesses seeking to navigate the Chinese market, understanding this policy rigidity is essential to avoiding legal pitfalls and aligning with the country’s digital economic trajectory.