Why China's central bank is not fond of stablecoins
What's the story
China's central bank, the People's Bank of China (PBOC), has reiterated its hardline stance against virtual currencies. The PBOC issued a warning about a rise in speculative activities and pledged to crack down on illegal stablecoin operations. At a recent meeting on virtual currency regulation, the bank said crypto speculation has surged lately due to various factors, posing new risk control challenges.
Legal clarification
PBOC emphasizes legal status of virtual currencies
The PBOC clarified that virtual currencies don't have the same legal status as fiat currency and cannot be used as legal tender in the market. The bank also termed virtual currency-related business activities as "illegal financial activities." This statement comes amid rising concerns over stablecoins.
Regulatory concerns
Stablecoins under scrutiny for regulatory non-compliance
The PBOC has raised alarms over stablecoins, saying they don't meet customer identification and anti-money-laundering requirements. The bank warned that these digital currencies could be misused for illegal activities such as money laundering, fraud, and unauthorized cross-border fund transfers. In response to these concerns, the central bank has vowed to "intensify efforts to combat related illegal financial activities" and "maintain economic and financial stability."
Strategic approach
PBOC's future plans for virtual currencies and stablecoins
In October, PBOC Governor Pan Gongsheng had said that the bank would continue its crackdown on domestic virtual currencies. He also said they would closely monitor and dynamically assess the development of overseas stablecoins. This comes as Hong Kong has set up a regulatory regime for stablecoins but has yet to issue any licenses to issuers.