China’s central bank has intensified its longstanding prohibition on virtual currency trading, including stablecoins, declaring them devoid of legal status and vowing stricter enforcement measures. The People’s Bank of China (PBOC) led a high-level coordination meeting on November 28, 2025, with top government agencies to address a resurgence in crypto speculation fueled by global price surges and social media influence. Authorities emphasized blocking trading channels, enhancing data monitoring, and expanding interagency information sharing to curb risks like illegal fundraising, fraud, and cross-border capital flight.
Background on China’s Crypto Stance
China pioneered aggressive cryptocurrency restrictions, beginning with mining bans and evolving into a comprehensive prohibition on trading and ownership. By May 30, 2025, the PBOC enacted a total ban effective June 1, suspending all transactions, seizing assets, and imposing penalties on violators. Virtual currencies lack fiat equivalence and cannot serve as legal tender, classifying related activities as illegal financial operations. This policy framework prioritizes financial stability amid decentralized assets’ volatility.
PBOC Governor Pan Gongsheng reinforced this position at the 2025 Financial Street Annual Conference in October, confirming collaboration with law enforcement to dismantle domestic trading and speculation. He described prior measures as effective, maintaining a zero-tolerance approach while monitoring offshore developments. The strategy aligns with advancing the state-controlled digital yuan as a compliant alternative.
Recent Regulatory Escalation
The November 28 PBOC-led meeting highlighted a spike in speculation, prompting orders for sustained channel blockages and rigorous oversight of money flows. Officials identified stablecoins as particularly problematic due to inadequate customer verification and anti-money laundering (AML) compliance. These assets risk enabling money laundering, scams, and unauthorized transfers evading capital controls.
Earlier actions included August 2025 directives halting stablecoin endorsements by brokerages, research firms, and think tanks, alongside canceling related seminars. Shenzhen authorities issued public warnings against disguised investment scams targeting retail investors. In late October, Pan Gongsheng flagged offshore stablecoins’ systemic threats, echoing global concerns over financial sovereignty.
Focus on Stablecoin Risks
Stablecoins draw heightened scrutiny for failing basic supervisory standards, amplifying vulnerabilities in international finance. Pan Gongsheng noted their role in exposing structural weaknesses, facilitating illicit activities like terrorist financing. Unlike China’s digital yuan, backed by regulatory safeguards, stablecoins pose compliance gaps exploitable for fraud.
Authorities view global stablecoin growth—despite adoption elsewhere—as a stability hazard, prompting dynamic international monitoring. The PBOC aims to prevent domestic spillover from foreign speculation, prioritizing economic security. Enforcement targets promotional hype and underground channels resurgence.
Digital Yuan Advancement
Parallel to crackdowns, China accelerates its central bank digital currency (CBDC), the e-CNY or digital yuan. New centers launched in Shanghai for international operations and Beijing for infrastructure underscore expansion. This state-backed tool offers security absent in private cryptos, supporting controlled innovation.
Governor Pan praised the digital yuan’s role in mitigating risks tied to unregulated assets. Rollout enhancements aim to integrate seamlessly into the financial ecosystem, countering crypto allure. Beijing positions this as a model for sovereign digital finance amid global debates.
Global Context and Implications
China’s reaffirmation contrasts with evolving international approaches, where some jurisdictions explore regulated stablecoins. Yet PBOC warnings align with broader concerns over speculation-driven instability. Domestically, measures shield retail participants from volatility and scams.