China Warns Stablecoins Threaten Global Finance, Vows Stricter Crypto Crackdown

Highlights:

• People’s Bank of China warns that stablecoins and digital currencies could threaten global financial stability.
• He highlighted that many digital currencies lack proper customer checks, increasing money laundering risks.
• China continues to implement strict policies to control cryptocurrency trading and domestic financial speculation.

Pan Gongsheng, Governor of the People’s Bank of China (PBoC), has warned that stablecoins and virtual currencies could pose significant risks to the global financial system. Speaking at the opening of the 2025 Financial Street Annual Meeting, he said that while digital currencies issued by market institutions have grown in recent years, they are still in the early stages of development.

“International financial organizations, central banks, and financial regulators remain cautious about the development of stablecoins,” Pan said. He explained that these digital currencies often fail to meet basic requirements for customer identification and anti-money laundering.

Such gaps, he added, create loopholes in global financial regulation that can facilitate money laundering, illegal cross-border fund transfers, and even terrorist financing. Pan warned that this environment encourages market speculation. It makes the global financial system fragile and affects monetary sovereignty in some less-developed economies.

The Governor of China's Central Bank stated that stablecoins amplify loopholes in global financial regulation, increase the fragility of the global financial system, and impact the monetary sovereignty of some underdeveloped economies. China will continue to crack down on the…

— Wu Blockchain (@WuBlockchain) October 27, 2025

China Reinforces Crypto Regulations

The PBoC Governor referred to discussions at the IMF and World Bank Annual Meetings in Washington, D.C., held ten days ago, where finance ministers and central bank governors highlighted stablecoins as a key topic. Global regulators expressed concerns that these digital assets currently lack safeguards to protect financial stability, customer funds, and compliance standards.

Pan also stressed China’s domestic measures to manage virtual currency risks. Since 2017, the PBoC, together with relevant authorities, has issued multiple policy documents aimed at preventing and controlling risks from virtual currency trading and speculation. “These policies remain in effect,” he said, reaffirming China’s commitment to maintaining economic and financial order. 

Looking ahead, Pan said the PBoC will continue to work with law enforcement agencies to crack down on domestic cryptocurrency operations and speculation. The bank will also closely monitor the development of overseas stablecoins and assess their potential impact on China’s financial system.

Zhou Xiaochuan, China’s former central bank chief, also warned about stablecoin risks. He noted concerns as China plans a yuan-backed digital token. Zhou said the benefits of adding stablecoins may be overstated. He explained that only a few financial services could gain efficiency and urged reviewing real demand. 

According to Bloomberg, former People’s Bank of China Governor Zhou Xiaochuan warned that stablecoins could fuel speculation and undermine financial stability. He noted that stablecoins offer limited cost advantages compared to China’s existing retail payment systems and added…

— Wu Blockchain (@WuBlockchain) August 28, 2025

China Orders Tech Giants to Pause Stablecoin Projects

China’s top tech firms have paused their stablecoin projects after direct instructions from Beijing. Authorities are concerned about the growing influence of privately issued digital currencies. Ant Group, backed by Alibaba, and e-commerce giant JD.com, were preparing to join Hong Kong’s pilot stablecoin program. They planned to issue asset-backed digital tokens and tokenized bonds.

Sources familiar with the matter said both companies stopped their projects after receiving clear guidance from mainland regulators. The People’s Bank of China and the Cyberspace Administration of China told them not to proceed.