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People’s Bank of China
The mainland China government, which has reportedly reiterated its strict line on “virtual currencies,” has warned that speculative trading has increased; it has promised to eliminate “illegal activities” involving stablecoins.

The People’s Bank of China (PBOC) held a coordination meeting on virtual currency regulation last Friday, according to the South China Morning Post. 

“Business activities related to virtual currencies constitute illegal financial activities,” the statement said.

There is a patchwork of regulations around the world. In Hong Kong, rules in the city licensing stablecoins referenced to fiat currencies kicked in from 1 August – a move that the Asian city hopes will help boost its financial centre. Other jurisdictions, such as the US, have paved the way to enable the use of stablecoins. In July, President Donald Trump signed the “GENIUS Act” (Guiding and Establishing National Innovation for US Stablecoins Act), which created a federal regulatory framework for payment stablecoins.

A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, such as a fiat currency such as the US dollar or a commodity like gold.

On 27 October, in a speech from the PBOC’s governor Pan Gongsheng, it referred to the digital renminbi currency, or “CNY” as a channel that will be further developed. 

However, Gongsheng was scathing about “the continuous emergence of various virtual currencies issued by market institutions, stablecoins in particular.”

“The prevalent view is that, as a form of financial activity, stablecoins at present cannot duly meet the basic requirements for client identification and anti-money laundering, so that they have amplified the loopholes in global financial regulation, such as those associated with money laundering, illicit cross-border fund transfers, and terrorist financing,” he said. “Amplified by market speculation, stablecoins have increased vulnerabilities to the global financial system and are even posing a challenge to the monetary sovereignty of some less developed economies.”

China imposed a ban on bitcoin “mining” in 2021. 

Last month, Gongsheng reiterated warnings that stablecoins remained in their early stages, noting that speculation surrounding them could erode the monetary sovereignty of less developed economies.

In September, the PBOC opened its international operations centre for the digital renminbi in Shanghai.