The People’s Bank of China (PBOC) has repeated its position against cryptocurrencies, especially stablecoins, saying they pose a big risk to financial stability. The PBOC recently met with 12 other regulatory agencies. They are worried about the rise of virtual currency speculation, which they think creates new risk management challenges.
The central bank said that virtual currencies are not the same as regular money and should not be used as money in the market. It stated again that activities with virtual currencies are seen as illegal financial operations. The PBOC banned crypto trading and mining in 2021. They say this was needed to reduce crime and keep the financial system safe.
Stablecoins are linked to regular currencies and have been seen as especially concerning. The PBOC said that these tokens do not meet legal rules and are often connected to illegal activities, like money laundering and fraud. The bank highlighted the importance of strong customer identification and anti-money laundering steps, which stablecoins do not have right now.
The PBOC said it will work harder to stop illegal financial activities linked to cryptocurrencies. This is to keep the economy and finances in order. The agencies at the recent meeting promised to work together more and share information to better follow crypto users and improve monitoring.
Even with the restrictions, reports indicate that China is still a major part of Bitcoin mining, holding a 14% market share as of October. Hong Kong has chosen a different path by letting stablecoin issuers get licenses since July. Chinese regulators’ actions have prompted some tech companies to halt their stablecoin projects.
China’s rules about cryptocurrencies are changing. Chinese regulators are primarily focused on reducing the risks associated with cryptocurrencies.
