Summary:
At a coordination meeting held on November 28, People’s Bank of China (PBOC) reiterated that virtual assets — including cryptocurrencies and stablecoins — do not hold the same status as fiat currency in China, cannot be used as legal tender, and should not circulate as currency. The central bank reaffirmed that related business activities constitute “illegal financial activity.” It also cautioned that stablecoins currently fail to meet necessary anti-money-laundering (AML) and Know-Your-Customer (KYC) standards, making them potential vehicles for money laundering, fraud, and illicit cross-border capital flows.
What Was Decided at the PBOC Meeting
- The PBOC’s coordination meeting emphasized that virtual currencies do not qualify as legal tender under Chinese law, and cannot be treated as currency for market circulation or payments.
- All business activities involving virtual currencies — including exchanges between fiat and crypto, crypto-to-crypto trading, derivatives, token issuance, and services acting as intermediaries or exchanges — are classified as illegal financial activities under current regulatory provisions.
- In particular, stablecoins were singled out as a high risk: the PBOC noted that stablecoin issuers and operators currently cannot guarantee compliance with AML/KYC requirements, which raises serious concerns about potential misuse for money laundering, fundraising fraud, and unauthorized cross-border funds transfers.
Why This Statement Matters
- Regulatory clarity and crackdown intent: The reaffirmation makes clear that China’s hardline stance on private digital currencies remains intact. It sends a strong signal that any attempt to use crypto or stablecoins for payments or financial services will be treated as illegal.
- Implications for stablecoin and crypto firms: Companies operating or offering crypto-related services — including stablecoin issuers, exchanges, wallets, or payment services — face significant legal and operational risks. Under current rules, such businesses can be shut down or penalized.
- Support for state-backed digital yuan as only official digital money: China continues to push its central bank digital currency, e-CNY, as the only legitimate digital-money option under state control and oversight, reinforcing monetary sovereignty and reducing reliance on private crypto alternatives.
- Global ripple effect: As one of the world’s largest economies, China’s stance may influence other jurisdictions — especially in Asia — prompting stricter global regulation of stablecoins and crypto payments.
Wider Context & Background
- The PBOC has repeatedly voiced skepticism about stablecoins. At the 2025 Financial Street Forum in Beijing, its Governor Pan Gongsheng warned that stablecoins present systemic risks, undermine monetary sovereignty, and fail to meet compliance standards necessary for regulated finance.
- China has already banned cryptocurrency exchanges, trading, and mining since 2021, framing those activities as threats to financial stability and money laundering prevention.
- Meanwhile, the e-CNY — China’s central bank digital currency — has seen growing deployment: over 14.2 trillion yuan in total transactions had been processed via the digital yuan network by end September 2025, according to PBOC statistics.
What to Watch Next
- Enforcement actions: Whether the PBOC and other Chinese regulators will launch fresh crackdowns on unlicensed crypto platforms, stablecoin issuers, or related service providers.
- Cross-border implications: Monitoring of stablecoin use for cross-border payments, capital flows, or currency substitution — particularly as global stablecoin adoption rises.
- e-CNY expansion: As private stablecoins are pushed out, expect accelerated rollout of the e-CNY and more support for its adoption domestically and internationally.
- Global regulatory shifts: Other countries may cite China’s stance as a rationale to reexamine or tighten their own stablecoin and crypto-asset regulation.
Bottom Line:
With its Nov. 28 coordination meeting, the PBOC reasserted China’s strict regulatory red line: private virtual assets, including stablecoins, remain unrecognized as legal currency, and their trade or circulation is considered illegal. The stance underscores China’s commitment to monetary control and financial stability, while setting the stage for broader enforcement against crypto and stablecoin activity within its borders.
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