China’s central bank has issued one of its strongest warnings in years against digital assets, reaffirming that all virtual currencies, including stablecoins, remain strictly prohibited on the mainland.
The renewed stance follows a high-level, multi-agency meeting in late November 2025, where the People’s Bank of China (PBoC) and senior regulators voiced escalating concerns about the resurgence of illegal crypto activity despite the nationwide ban first imposed in 2021.
Stablecoins Framed as a Direct Threat to China’s Financial System
In its latest communication, the PBoC singled out stablecoins as a particularly dangerous asset class. Officials argued that these tokens fail to meet China’s strict requirements for customer identification and anti-money-laundering verification.
According to regulators, the anonymous nature of stablecoin transfers makes them fertile ground for online scams, underground banking transactions, fraud schemes, and illicit cross-border capital flows, all of which pose systemic risk to the country’s tightly controlled financial architecture.
The central bank reiterated that the widespread use of dollar-backed stablecoins is incompatible with China’s goal of maintaining monetary sovereignty and financial security.
Tension With Hong Kong’s More Open Digital Asset Strategy
Beijing’s hardened message arrives at a sensitive moment for Hong Kong, which has spent the past two years establishing a regulated framework designed to attract crypto companies. The mainland’s renewed crackdown has already cast a shadow over the city’s stablecoin initiatives and weighed on the share prices of Hong Kong-listed firms involved in digital assets.
The contrasting regulatory approaches underscore a growing divergence: Hong Kong is positioning itself as a regional hub for compliant digital finance, while Beijing continues to enforce absolute prohibition on all non-state-controlled digital currencies.
Protecting the Yuan and Promoting the e-CNY
The PBoC has long viewed the rise of U.S. dollar-denominated stablecoins as a strategic challenge. Officials worry that widespread adoption of dollar-based digital assets could undermine the yuan’s influence, complicate capital-flow supervision, and introduce external volatility into China’s financial system.
By doubling down on enforcement, regulators aim to protect the yuan, reinforce capital controls, and accelerate adoption of China’s own central bank digital currency, the e-CNY, which remains the only legal form of digital money allowed domestically.
Crackdowns Intensify as Underground Mining and Trading Persist
Despite Beijing’s sweeping 2021 prohibition, underground crypto activity has never fully disappeared. Informal Bitcoin mining operations continue to surface in remote regions, often disguised within industrial facilities to avoid detection. Peer-to-peer trading and off-exchange stablecoin transfers also remain active in certain online networks.
Authorities report that enforcement campaigns will escalate in the months ahead, with a focus on tougher monitoring of capital flows, enhanced cross-agency intelligence sharing, and stricter policing of domestic internet and telecom channels used to facilitate crypto transactions.
Officials signaled that the government intends to close remaining loopholes and decisively stamp out all residual crypto involvement within China’s borders.