China Plans to Stop Crypto and Stablecoin Payments

The People’s Bank of China (PBOC) is preparing stronger enforcement measures to stop the use of crypto and stablecoins for payments. 

The officials raised concerns that crypto-related activities are creating new risks in the country’s financial system. This comes after officials observed a rise in trading activity despite the strict ban introduced in 2021.

Official Says Crypto Still Has No Legal Status in China

The PBOC recently met with representatives from several powerful state agencies. The main goal of the high-profile gathering was to discuss how to deal with speculation and illegal activity linked to virtual currencies.

Authorities acknowledged that the 2021 ban reduced crypto use for a time, but said related activity has now resurfaced. Today, scams, illegal fundraising, and unregulated cross-border money transfers are happening more often. Officials believe these trends pose serious challenges to financial stability and risk management.

During the meeting, regulators repeated their long-held view: virtual assets do not have the status of legal tender and cannot be used as currency. 

Therefore, using crypto or stablecoins for payments or investment counts as illegal financial activity in China. As a result of this, regulators called for stronger cooperation across different government agencies. 

Tension as Big Companies Explore Digital Settlement Models

The crackdown is happening at the same time some major Chinese companies are exploring their own digital asset models. In August, PetroChina said it was studying how stablecoins might improve certain cross-border payments. 

Company leaders are watching Hong Kong’s new digital asset systems to see if they can help make international settlements faster and easier. However, Beijing seems cautious. 

Earlier this year, China’s securities regulator (CSRC) quietly told at least two major Hong Kong brokerages to pause their tokenization projects. This shows that the central government is wary of rapid expansion in digital-asset markets. This is especially the fast growing tokenized real-world assets (RWA) sector. 

Another sign of tight control appeared in April when local authorities reportedly sold about 15,000 Bitcoins on offshore exchanges. This was done to ease growing financial pressure in municipal budgets.

China Considers Its Own Stablecoin, But With Limits

Even as China cracks down on private digital assets, some government departments remain open to state-controlled versions. Reports in August suggested that China may allow the first issuance of yuan-backed stablecoins. 

This move would support the country in competing with the United States, where new laws for dollar-backed stablecoins are advancing quickly. Experts say a Chinese state-issued stablecoin would give regulators full oversight. This will also help avoid the anonymity and risks associated with private crypto coins.

While China continues to tighten restrictions, the United States, under the Donald Trump administration, has taken the opposite direction. Trump has openly stated that he wants the U.S. to become the global center for crypto innovation.