TLDR
- China has banned the unapproved issuance of yuan-pegged stablecoins overseas to maintain financial stability.
- Domestic firms are prohibited from facilitating offshore stablecoin activities through international affiliates.
- The People’s Bank of China reiterated that stablecoins are not considered legal tender in the country.
- The new regulations aim to prevent risks related to money laundering, fraud, and cross-border capital flow.
- China plans to strengthen monitoring and enforcement through coordinated efforts between central and local authorities.
China has reinforced its crackdown on virtual currencies by prohibiting the overseas issuance of yuan-pegged stablecoins. A joint notice issued by eight government bodies, including the People’s Bank of China (PBOC), stressed that no entity or individual can issue such stablecoins without proper approval. This directive targets firms both domestically and internationally, aiming to curb risks linked to virtual asset speculation and financial instability.
Prohibition on Unapproved Yuan-Pegged Stablecoins
The new regulations focus on the unauthorized issuance of yuan-pegged stablecoins abroad. China’s authorities clarified that any issuance without prior approval from relevant officials is illegal. “These activities could lead to serious risks, such as money laundering, fraud, and cross-border capital risks,” the notice explained.
Moreover, domestic companies are prohibited from facilitating such operations through their overseas affiliates. The government’s goal is to ensure that financial security is maintained and monetary sovereignty is upheld. Any foreign involvement in yuan-backed stablecoin issuance will now fall under stricter monitoring.
China Reaffirms Ban on Unauthorized Stablecoins
China’s financial regulators emphasized that virtual currencies, including stablecoins like Tether, have no legal tender status in the country. The notice reiterated that any stablecoin activities remain illegal unless authorized by the government. “Stablecoins pegged to legal tender can perform currency-like functions, which jeopardize monetary sovereignty,” the statement highlighted.
This statement builds upon previous crackdowns and solidifies the government’s hardline stance on cryptocurrencies. By restricting the use of such coins, China aims to preserve its control over the financial system and prevent unauthorized digital currencies from circulating freely.
Strengthened Oversight and Enforcement
The notice also outlines a comprehensive approach to regulating related financial services. Authorities will now closely monitor financial institutions, technology providers, and intermediary firms. The aim is to ensure compliance with the new rules and strengthen internal controls to prevent illegal activities.
The government plans to establish a coordinated framework for enforcing these rules, linking both central and local enforcement bodies. Public education will be ramped up to raise awareness of the risks associated with unapproved stablecoin issuances. Monitoring capital and information flows will also be a central part of these new measures.
The ban reflects China’s broader efforts to assert its financial sovereignty as it develops its own state-backed digital currency, the e-CNY. By blocking the issuance of foreign-backed stablecoins, China aims to reinforce the use of its official digital currency while controlling virtual asset speculation.
This move comes as the global market for stablecoins continues to grow, with transaction volumes hitting $33 trillion in 2025.
