China Cracks Down on Stablecoin Promotions While Pursuing Yuan Digital Currency

The move targets concerns about fraud and speculation, even as China quietly develops its own yuan-backed digital currency projects.

In late July and early August 2025, financial regulators told major brokerages and research firms to cancel stablecoin events and halt related publications. Officials worry these digital assets could become tools for fraudulent activities on the mainland.

Christopher Wong, a currency expert at Oversea-Chinese Banking Corp in Singapore, explained the government’s thinking. “There’s still a worry that not everyone knows adequately about crypto and policymakers, being pragmatic, don’t want herd mentality when investors buy into something that they do not know what the risks are,” he said.

The crackdown followed specific warnings about stablecoin fraud schemes. On July 7, 2025, Shenzhen’s government task force issued an alert about unlicensed entities promoting fake digital asset investments.

These groups exploit people’s limited knowledge about stablecoins to mislead investors. The schemes often operate as fronts for illegal fundraising, online gambling, fraud, and money laundering operations.

The warning came after fake JD.com stablecoin promotions spread across Chinese social media. The e-commerce giant had to clarify that these entities were misleading people by falsely claiming company affiliation.

Under Chinese law, people who participate in illegal fundraising bear personal responsibility for their losses. The government warns that money lost to these schemes likely won’t be recovered.

While mainland China restricts stablecoin promotion, Hong Kong operates as China’s regulatory sandbox for digital asset innovation. The territory recently implemented a new stablecoin framework with special transition rules.

Major financial institutions are participating in Hong Kong’s stablecoin experiments. Standard Chartered’s Hong Kong subsidiary partnered with Web3 company Animoca Brands to develop a Hong Kong dollar stablecoin. This partnership is significant because Standard Chartered is one of only three banks authorized to issue physical Hong Kong dollars.

Chinese e-commerce giant JD.com also registered entities in Hong Kong tied to potential stablecoin projects. Ant International, part of Jack Ma’s Ant Group, reportedly plans to apply for stablecoin licenses in both Singapore and Hong Kong.

China’s stablecoin story extends beyond domestic restrictions. The country is developing yuan-backed stablecoins for use outside mainland borders, particularly for the Belt and Road Initiative.

Chinese blockchain Conflux announced a stablecoin backed by offshore Chinese yuan in late July. This digital asset aims to serve Chinese entities operating internationally and countries involved in China’s global infrastructure strategy.

The approach reflects China’s broader goal of challenging U.S. dollar dominance in global finance. By creating yuan-backed alternatives to dollar-pegged stablecoins like Tether’s USDT, China hopes to expand its currency’s international influence.

Interestingly, Pan Gongsheng, China’s central bank governor, recently spoke positively about stablecoins’ potential in global finance. This suggests the government sees value in the technology when properly controlled.

China’s dual approach reveals its complex relationship with digital currencies. The government restricts domestic stablecoin promotion to prevent speculation and fraud while pursuing strategic yuan-backed initiatives internationally.

This strategy allows China to maintain domestic financial stability while positioning itself in the global digital currency competition. The crackdown on seminars and research represents an attempt to control the narrative around stablecoins within China’s borders.

The timing coincides with growing global acceptance of stablecoins, including new U.S. regulations that encourage innovation. China appears determined to prevent domestic speculative bubbles while ensuring it doesn’t fall behind in the international digital currency race.