China Doubles Down on Crypto Ban as PBOC Issues Warning on Stablecoins

China’s central bank has reiterated that digital assets remain illegal in the country. It said cryptocurrencies and related business activities continue to pose financial risks and fall short of core compliance requirements.

The People’s Bank of China said the prohibition remains in force following a November 28 coordination meeting.

Why is China Maintaining its Strict Crypto Ban Stance?

At the meeting, the bank reiterated that digital assets do not share the legal status of fiat currency and are not permitted as a means of payment in commercial transactions.

It added that crypto-linked business activity constitutes illegal financial activity under Chinese law.

The PBOC singled out stablecoins, saying they fail to meet standards for customer identification and anti-money-laundering controls.

That gap, the bank said, exposes them to misuse in money laundering, fraudulent fundraising, and illegal cross-border capital transfers.

“Stablecoins, a form of virtual currency, currently fail to effectively meet requirements for customer identification and anti-money laundering, posing a risk of being used for money laundering, fundraising fraud, and illegal cross-border fund transfers,” a translated version of the statement reads.

Considering this, the Chinese authorities said they remain focused on tightening risk prevention and ensuring firms and individuals comply with the country’s prohibitions.

Meanwhile, the announcement reflects Beijing’s continued commitment to strict enforcement, even as other jurisdictions pursue more accommodative regulatory paths.

China’s stance stands in contrast with the broader shift in major economies over the past year.

Governments around the world, including the United States, have introduced frameworks to integrate digital assets into traditional financial markets. These measures are driving greater industry participation and institutional adoption.

However, China has maintained its sweeping 2021 ban on the emerging industry.

Instead, the authorities have continued to prioritize development of its central bank digital currency, the e-CNY, as it advances the digital yuan across pilot regions and public-sector payment systems.

Interestingly, despite the restrictions, underground crypto activity has persisted within the Asian country.

Reports have pointed to ongoing usage of virtual assets in parts of the country. Reuters recently estimated that China now accounts for 14% of the global Bitcoin mining market, marking a quiet return of crypto mining activity despite the nationwide ban.