China Reaffirms Sweeping Crypto Ban, Flags Stablecoins as Financial Threat

Beijing Reaffirms Digital Asset Prohibition

The People's Bank of China (PBOC), the nation's central bank, has once again affirmed its stringent prohibition on digital asset operations, categorizing them as illegal activities within the country. This reaffirmation follows a high-level coordination meeting held on November 28, 2025, involving representatives from thirteen government agencies, with official statements released on November 29, 2025.

The PBOC explicitly stated that 'virtual currencies do not have the same legal status as fiat currencies, lack legal tender status, and should not and cannot be used as currency in the market.' This declaration underscores China's consistent policy that all business activities linked to cryptocurrencies, including trading, exchange services, and token issuance, are considered illegal financial operations under Chinese law.

Stablecoins Identified as Key Risk to Financial Stability

A significant focus of the recent announcement was the heightened scrutiny on stablecoins. The PBOC singled out these digital assets, asserting they fail to meet fundamental requirements for customer identification (KYC) and anti-money laundering (AML) controls. This deficiency, according to the central bank, exposes stablecoins to misuse in illicit activities such as

• money laundering
• fraudulent fundraising
• illegal cross-border fund transfers
• underground payments

The PBOC views these risks as a direct threat to the country's financial security and stability.

Continued Crackdown Amid Resurfacing Speculation

The latest warning from Beijing comes amid a reported 'resurfacing' of digital asset speculation activity. The PBOC has vowed to 'severely crack down on illegal and criminal activities' in this area and 'intensify efforts to combat related illegal financial activities' to maintain economic and financial stability.

China has a long history of progressively tightening its stance on cryptocurrencies, culminating in a comprehensive ban on all cryptocurrency transactions and mining in September 2021. Despite these sweeping prohibitions, some underground crypto usage and mining activities reportedly continue within the country. This firm stance contrasts with the approach taken by Hong Kong, which has embraced the industry with licensing regimes for exchanges and stablecoin issuers. Concurrently, China continues to advance its own state-backed digital currency, the digital yuan (e-CNY), which has seen over 225 million personal wallets opened in its pilot program.