Stabilizing the Fantasy: China’s Official Stand on Stablecoins

By: crypto insight|2025/12/01 18:30:08

Key Takeaways

Chinese authorities have explicitly classified stablecoins as a form of virtual currency, incorporating them under the same regulatory scope as other virtual currencies.
The regulatory focus is on mitigating risks such as money laundering, fraud, and unauthorized cross-border capital flows rather than fostering innovation.
The delineation is clear; stablecoin-based projects must operate completely outside of China, with no touchpoints within the country’s jurisdiction.
This move cements a clear regulatory boundary, eliminating the previous ambiguity entrepreneurs believed existed around the potential for stablecoins in China.

WEEX Crypto News, 2025-12-01 10:29:17

The New Reality for Stablecoins in China’s Regulatory Landscape

The inclusion of stablecoins within China’s broader virtual currency regulatory framework marks a significant shift in the nation’s regulatory landscape. On a pivotal meeting held on the 28th of an undisclosed month, key players from various regulatory bodies, including the Ministry of Public Security, the Cyberspace Administration, and the People’s Bank of China, came together to establish a common understanding and approach towards stablecoins. This meeting, rather understated by its title, carries substantial weight by highlighting a unanimous stand from these authorities on the definition and treatment of stablecoins as part of the virtual currency ecosystem.

Understanding the Shift: From Ambiguity to Definition

For years, the regulatory environment in China concerning cryptocurrencies, including stablecoins, was characterized by a degree of uncertainty. A gap existed in the definition, creating a perceived opportunity for innovation, debate, and hope among entrepreneurs. However, with the authorities’ definitive statement that “stablecoin is a form of virtual currency,” this gap has been firmly closed. The announcement places stablecoins unequivocally within the ambit of illegal financial activities associated with virtual currencies, removing the prior ambiguity that market participants might have leveraged to argue for differentiation.

The mentality that advanced technology, improved security measures, and transparency of underlying assets could carve out regulatory space has now been disproved. The core concern for Chinese regulators remains- managing the tangible risks associated with stablecoins, overshadowing their potential technological benefits. As the communication from the meeting notes, stablecoins present higher risks of being used for money laundering, fraud, and facilitating unauthorized cross-border capital flows, issues that underpin many criminal activities associated with virtual currencies.

Analyzing the Regulatory Intent: Risk Over Innovation

Regulators have made it unequivocally clear that stablecoins, now engrained as part of the virtual currency structure, are subject to the same legal frameworks already applied to other cryptocurrencies. Traditional approaches may have flirted with innovation, but the focus now shifts towards stringent risk mitigation. Combating risks associated with the misuse of stablecoins, such as enhancing the opacity of transactions and easing cross-border money movement, supersedes any desire for technological experimentation or commercial opportunity within Chinese borders.

A significant misconception within the industry has been the belief that China’s regulatory environment will eventually align with global practices, especially places like Hong Kong, Singapore, or the United States, which have shown a willingness to explore different avenues regarding stablecoins. These regions focus on integrating stablecoins to enhance financial efficiency and competitiveness. In contrast, China’s unwavering prioritization of financial stability and control dictates a very different regulatory approach.

The Maneuvering of Market Players: Operating Beyond Borders

Startups, previously adhering to a model where the innovation often preceded regulation, now must realign. The message is unmistakable; operations tied to stablecoins must exist fully outside the influence of Chinese jurisdiction. This includes using foreign legal entities, banking in external jurisdictions, and catering to non-Chinese users exclusively. Any form of linkage back to China – be it through customer interactions, financial transactions, or technical services – is impermissible under the newly established regulatory framework.

By clarifying this stance, Chinese regulators have set a firm boundary, transforming what was once potential legal liminality into a crisp line of legal demarcation. Consequently, for organizations situated within China or focusing on the Chinese market, these guidelines extinguish prospects of exploiting niche opportunities for innovation involving stablecoins.

The Strategic Implications for Entrepreneurs

This regulatory tightening can be viewed in two ways. On one hand, Chinese entrepreneurs are barred from pursuing business models reliant on stablecoins domestically, necessitating a pivot to international markets. Implementing this shift requires embracing complete operational separation when considering any project related to stablecoins.

On the other hand, the forthright declarations from Beijing offer a degree of clarity not previously available. There’s an elimination of the risk of investing resources into ventures that regulators will unequivocally suppress. This explicit communication allows entrepreneurs to allocate their efforts more effectively across viable, legally sound opportunities beyond the Chinese market.

Conclusion: A Bold Move Toward Regulatory Clarity

China’s position on stablecoins is definitive, viewing them through the same lens as other virtual currencies and negating the possibility of local utilization or experimentation. This imposition has demarcated a concrete boundary where innovation must either conform entirely to regulatory expectations or exist entirely outside them. For proponents of stablecoins, the pursuit now rests entirely on international opportunities, fundamentally transforming the landscape of cryptocurrency ventures within China.

Frequently Asked Questions (FAQs)

What are the main risks associated with stablecoins according to Chinese authorities?

Chinese regulators highlight three primary concerns regarding stablecoins: money laundering, fraudulent activities, and unauthorized cross-border capital flows. These risks underpin the regulations aligning stablecoins with the broader category of virtual currencies in terms of regulatory attention and enforcement.

How does the new regulation affect the possibility of innovation with stablecoins in China?

The latest regulatory stance significantly restricts innovation involving stablecoins within China’s borders. Entrepreneurial efforts must focus on projects that completely avoid any connection to the Chinese jurisdiction to comply with the current legal framework.

Can stablecoin projects based outside still serve Chinese citizens?

No. Stablecoin projects must operate as complete foreign entities without providing any direct or indirect services to Chinese citizens. This includes ensuring that no business activities are conducted within China or involve Chinese users, reinforcing a total separation in operational reach.

Why does China have a different approach to stablecoins compared to other regions?

China’s regulatory emphasis is on maintaining financial security and control rather than enhancing market efficiency. Unlike regions like Hong Kong or Singapore, where stablecoins might be seen as tools for increasing competitiveness and efficiency, China’s primary objective remains safeguarding against financial risks.

How should entrepreneurs adjust their strategies in the wake of these new regulations?

Entrepreneurs must thoroughly re-evaluate their business models, ensuring they comply with the Chinese exclusionary perspective on stablecoins. For those choosing still to pursue stablecoin projects, concentrating solely on international markets and confirming all operations are outside China is essential.

Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:

To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:

Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:

I. Clarify the essential attributes of virtual currency, Real-World Assets tokenization, and related business activities

(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.

The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.

A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.

（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.

Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.

II. Sound Work Mechanism

(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.

The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.

(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.

III. Strengthened Risk Monitoring, Prevention, and Disposal

(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.

(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.

(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.

(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.

（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.

（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.

（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.

（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.

IV. Strict Supervision of Domestic Entities Engaging in Overseas Business Activities

（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.

（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.

(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.

V. Strengthen Organizational Implementation

(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.

(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.

VI. Legal Responsibility

(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.

(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.

This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.

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