China clamps down on stablecoins…all-out push for digital yuan

"Stablecoins are still in an early stage

Fail to meet anti-money laundering requirements"

China reaffirmed its tough stance on cryptocurrencies. Recently, while the United States has incorporated privately led stablecoins into the regulatory system to expand the influence of dollar-based cryptocurrencies, China is maintaining cryptocurrency regulations and accelerating the expansion of the central government-led digital yuan (e-CNY).

Pan Gongsheng, governor of the People's Bank of China, said at a financial forum held in Beijing on the 27th, "Stablecoins are still in an early stage, and international financial authorities are taking a cautious stance." He emphasized, "Stablecoins fail to meet customer identification (KYC) and anti-money laundering (AML) requirements, widening a blind spot in global financial regulation," and added that "they will maintain the cryptocurrency-related regulatory policies implemented since 2017 and, in cooperation with judicial authorities, crack down on cryptocurrency trading and speculative activities."

The Chinese government's move contrasts with recent efforts in the United States and Hong Kong to institutionalize stablecoins. In July, U.S. President Donald Trump signed the 'Genius Act' establishing a regulatory framework for stablecoins, and in August Hong Kong enacted the 'Stablecoin Ordinance.' In contrast, Chinese authorities have halted in full the stablecoin issuance plans that big tech firms such as Alibaba and JD.com were pursuing in Hong Kong, reaffirming the principle that "the right to issue currency rests with the central authority."

However, China is conducting parallel research on stablecoins. Recently, the government's largest research fund solicited research projects on 'Stablecoin and Cross-National Monitoring Systems,' agreeing to provide 200,000-300,000 yuan (approximately 40 million-60 million won) in research funding per project. China plans to redefine the strategic status of the e-CNY and expand commercial banks' participation.

Reporter Hye-in Lee hey@hankyung.com