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The People’s Bank of China (PBoC), the country’s central bank, said that “virtual currency speculation has resurfaced” due to multiple factors, posing new financial risks and challenges.
“Virtual currencies do not have the same legal status as fiat currencies, lack legal tender status, and should not and cannot be used as currency in the market,” the PBoC reportedly stated in a translated statement.
The PBoC also said it would “severely” clamp down on all domestic virtual currency-related business activities that qualify as illegal financial operations to “maintain the stability of the economic and financial order.”
The remarks follow a meeting in Beijing on Friday, which convened representatives from the People’s Bank of China (PBOC), the Ministry of Public Security, the Central Cyberspace Affairs Commission, and 10 other agencies.
 
The central bank said its crackdown on virtual currency activity, demonstrated by its blanket ban on crypto trading and mining in September 2021, has “rectified the chaos in the virtual currency market” and “achieved significant results.”
Despite the 2021 ban, China recently reemerged as the world’s third-largest mining hub, with an estimated 14% share of global mining by the end of October, a recent report from Reuters indicates.
Stablecoin Concerns
During the meeting, the People’s Bank of China singled out stablecoins as a particular concern, stating that the tokens lack proper customer identification and anti-money laundering protections, and were being used in criminal activities.
“Stablecoins are a form of virtual currency, and currently cannot effectively meet requirements for customer identification and Anti-Money Laundering, posing a risk of being used for illegal activities such as money laundering, fundraising fraud, and illegal cross-border fund transfers,” the central bank stated.
While mainland China has reiterated its anti-crypto stance, Hong Kong has embraced the industry with licensing regimes for digital asset exchanges and stablecoin issuers. Notably, some Chinese tech giants have been forced to pause their plans to issue stablecoins in Hong Kong after regulators from the People’s Bank of China instructed them not to move ahead.