Thirteen Chinese regulatory authorities, led by the People's Bank of China (PBOC), have convened a coordination meeting to combat cryptocurrency speculation, formally bringing stablecoins under virtual currency supervision. The meeting, attended by the Ministry of Public Security, the Cyberspace Administration of China, and the Central Financial Commission, among others, clarified that stablecoins fall under the category of virtual currencies and their related activities will be regulated as illegal financial operations.
Stablecoins currently fail to meet compliance requirements such as customer identification and anti-money laundering (AML), posing risks of being exploited for illicit activities like money laundering, fundraising fraud, and cross-border capital transfers. The joint meeting signals intensified regulatory scrutiny, with PBOC Governor Pan Gongsheng having previously warned of stablecoin risks. Notably, the expanded participation of three additional agencies—the Central Financial Commission, the National Development and Reform Commission, and the Ministry of Justice—compared to the 2021 regulatory framework highlights an upgraded, multi-dimensional approach to virtual currency oversight.
In 2025, the volatile cryptocurrency market has seen dramatic swings in Bitcoin prices, while S&P Global recently downgraded stablecoin issuer Tether (USDT) from "4" (constrained) to "5" (vulnerable). The regulatory classification of stablecoins further strengthens China's virtual currency supervision system, with the high-level interagency collaboration underscoring efforts to curb illegal financial activities.
Stablecoins, a prominent subset of virtual currencies, have drawn regulatory focus due to their susceptibility to money laundering and cross-border violations, challenging financial stability. The meeting emphasized enhanced interdepartmental coordination, improved legal frameworks, and stricter monitoring of fund flows to combat crimes and maintain financial order.
Cross-border payments and remittances are often cited as key use cases for stablecoins. Former PBOC Governor Zhou Xiaohua noted that claims about traditional cross-border payment systems being "prohibitively expensive" may be exaggerated, as costs largely stem from foreign exchange controls and compliance (e.g., KYC/AML) rather than technology. However, stablecoins have increasingly been used to circumvent regulations, with illegal transactions—such as a Shanghai court case involving $6.5 billion in unauthorized forex trades via stablecoins—exposing systemic risks.
Analysts, including Wang Pengbo of Broadcom Consulting, warn that stablecoins' 24/7 borderless circulation enables evasion of capital controls, amplifying systemic financial risks. Globally, discussions at the IMF-World Bank Annual Meetings highlighted stablecoins' failure to meet AML standards, exacerbating financial vulnerabilities and threatening monetary sovereignty in emerging economies.
China has progressively tightened virtual currency regulations since 2013, banning Bitcoin as legal tender and outlawing initial coin offerings (ICOs) in 2017. The 2021 guidelines further prohibited all virtual currency-related financial services. Despite these measures, speculative trading persists, with Bitcoin recently plunging nearly 5% to $85,800 amid market panic.
The meeting reaffirmed China's commitment to risk prevention, maintaining prohibitive policies and cracking down on illegal virtual currency activities. Governor Pan stressed ongoing enforcement of existing regulations and monitoring of offshore stablecoin developments. Experts caution that virtual currencies' cross-sector complexities demand multi-agency collaboration for effective oversight, urging investors to avoid speculative trading and opt for compliant financial products.