China Begins Policy Talks to Crack Down on Stablecoin and Crypto Payments

China is tightening its stance on digital assets again with regulators warning of rising risks in the country’s economy. It is preparing a new set of enforcement measures to stop crypto and stablecoin payments.

China Opens Policy Talks to Reinforce Crypto Crackdown

According to a release by the PBOC, the bank met with representatives from various state agencies and courts to discuss how to address virtual currency speculation.

Officials were from the Ministry of Public Security, the Cyberspace Administration, and other key departments. This comes as trading activity has resurfaced in the country.

According to the authorities, while progress has been made since the 2021 crypto ban, the use of such assets returned to the markets. Nowadays, scams, illegal fundraising, and unregulated cross-border transfers happen more often. Also, risk management is faced with situations and challenges that call for attention.

During this meeting, officials stuck to their position that virtual assets do not have legal tender status and that they also cannot circulate as currency. According to them, it represents an illegal financial activity when used in payment or investment.

What really worries the officials is the anonymity of stablecoins. They expressed their concerns over customer identification and the facilitation of fraudulent schemes.

Regulators called for inter-agency coordination in a bid to increase monitoring and track the movement of funds more effectively.

This comes as some enterprises are testing digital asset settlement models.  In August, PetroChina announced that it is looking into using stablecoins for certain cross-border transactions. The company’s leaders are watching Hong Kong’s new system to see if it can make international payments better.

China Maintains Caution Toward Digital Assets

Earlier this year, the CSRC issued informal guidance telling at least two major brokerages in Hong Kong to stop their tokenization projects. This shows that Beijing is cautious about the growth of digital asset markets outside of the country. In particular, this could apply to RWA tokenization.

Notably, in April, local authorities reportedly sold off about 15,000 Bitcoins on offshore exchanges. The sales were intended to address fiscal pressures within municipal governments.

Meanwhile, parts of the government are open to creating their own virtual currency systems. In August, reports indicated that China is thinking about allowing the first issuance of yuan-backed stablecoins. This is meant to compete with the United States which is moving forward with laws for dollar-backed stablecoins.