China’s PBOC Reasserts Virtual Currency Ban to Curb Speculation

On November 28th, the People’s Bank of China held a meeting to reinforce its stance against virtual currencies, emphasizing their lack of legal status and potential financial risks.

This clampdown could pivot financial activities towards the digital yuan, potentially reshaping China’s monetary landscape and impacting global cryptocurrency markets.

PBOC Cracks Down on Cryptocurrencies to Bolster Digital Yuan

Virtual currencies are reaffirmed as illegal financial activities in China, lacking the legal status of fiat currency. The PBOC Governor Pan Gongsheng, known for a hardline view on cryptocurrencies, led this meeting emphasizing strict law enforcement against such activities. According to Jinshi, Commentator for PANews, “The PBOC’s ongoing measures are indicative of a tough regulatory stance to reduce domestic speculation on cryptocurrencies.”

Stablecoins are not exempt from the crackdown. Regarded as risky due to potential misuse in activities like money laundering, they fail to meet anti-money laundering standards. This reinforces China’s push for the digital yuan, a state-backed alternative gaining traction.

Industry observers noted a potential shift of capital flows towards compliant assets. The crackdown drives adoption of the digital yuan, supported by 14.20 trillion yuan in transactions across 26 regions. Pan Gongsheng’s stance may affect cryptocurrency exchanges and users in China and beyond.

China’s Policy Shift: Stablecoins Targeted, Digital Yuan Grows

Did you know? China’s assertive approach in 2024 reduced Bitcoin’s domestic usage, prompting users towards the digital yuan. This strategy boosts digital currency while minimizing the risks associated with decentralized alternatives.

Bitcoin’s (BTC) last quoted at $90,591.15, showcasing a 7.16% increase over the past week, although suffering a -0.87% dip in the past 24 hours, according to CoinMarketCap. Its market cap stands at $1.81 trillion with significant trading fluctuations over recent months.

The Coincu research team anticipates heightened influence of the digital yuan domestically and potentially globally. Financial and technological adjustments are likely, aligning with China’s digital currency strategy. This reflects China’s plan to create a regulated and controlled monetary system.