China declares a new war on crypto – This time, stablecoins are the target

In a recent turn of events, the Chinese central bank has intensified its crypto ban, leading a coordinated government effort to crush renewed speculation and identify stablecoins as the key threat.

China’s crypto crackdown

Despite sweeping prohibitions in effect since 2021, the People’s Bank of China (PBoC) convened a critical meeting on the 28th of November 2025, involving 13 government agencies.

The PBoC’s specific focus on stablecoins suggests that China’s financial defense is shifting.

No longer is the fight against volatile assets like Bitcoin [BTC] — instead, the real war is against any decentralized instrument that threatens the authority of its currency and the integrity of its stringent capital controls.

The core issue driving the renewed crackdown is the PBoC’s insistence that virtual currencies lack legal tender status and cannot function as a means of payment within China’s markets.

Why are officials so concerned?

The PBoC reaffirmed that crypto-related activities are illegal and pose a threat to China’s financial stability, but stablecoins continue to challenge this stance.

Pegged to fiat currencies, stablecoins offer a discreet way to move money and bypass China’s strict capital controls.

In its meeting with 13 agencies, the PBoC warned that stablecoins lack proper customer identification and AML safeguards, making them a prime tool for illicit cross-border transfers and shadow banking activity.

As Liu Honglin, founder of Man Kun Law Firm, noted, the official statement “has erased any ambiguity, speculation, and illusions” around China’s stablecoin policies, adding,

“Regulators have drawn a concrete red line on what used to be a vague borderline.”

Ripple effect

The timing of China’s renewed crackdown is closely tied to rising enthusiasm in Hong Kong.

After Hong Kong passed its stablecoin bill in May, interest in digital assets surged, spilling into mainland China despite the 2021 ban.

But Beijing has now moved to shut that momentum down.

The PBoC’s latest action makes clear that even Hong Kong–regulated stablecoins pose a threat to the yuan and the rollout of the e-CNY.

Major tech firms like Ant Group and JD.com had already halted plans for Hong Kong stablecoins following PBoC pressure.

China’s securities regulator also urged local brokerages to pause RWA tokenization efforts, signaling a broad effort to clamp down on crypto activity across the region.

Market reaction

The immediate financial impact of the coordinated crackdown was sharp and punitive, as Hong Kong-listed stocks with cryptocurrency-related businesses tumbled on the 1st of December. 

Shares of Yunfeng Financial Group (038.HK), which has been expanding into cryptocurrency and tokenization, slumped more than 10% in early trading, putting the firm on track for its worst day in two months.

Bright Smart Securities and Commodities Group (1428.HK) dropped roughly 7% and the Digital-asset platform, OSL Group (0863.HK), lost more than 5%.

What’s more?

This shows that China’s renewed, coordinated crackdown is not merely a repetition of the 2021 ban — it is a strategic, surgical operation targeting the specific threat posed by stablecoins to national capital controls and economic stability.

China’s crackdown on private tokens comes even as it considers issuing its own yuan-backed stablecoins, an effort to boost the yuan’s global reach and counter U.S. dominance in digital finance.

So, now as Hong Kong markets and mainland traders may feel the immediate impact, the broader consequence is a deepening digital-currency split between the world’s two biggest economies.

Final Thoughts

• The crackdown is not a re-run of 2021. By coordinating 13 agencies, Beijing has explicitly targeted stablecoins as the final loophole enabling capital flight.
• The action decisively chills Hong Kong’s aspirations to become a global digital asset hub.