- China reinforces its ban on digital assets as regulators note rising speculation and renewed mining activity.
- Stablecoins face heightened scrutiny due to weak safeguards and growing risks linked to illegal financial activity.
- Officials tighten oversight in Hong Kong to limit regulatory gaps and curb mainland related digital asset projects.
The People’s Bank of China has restated that digital asset activity remains illegal across the mainland. Officials delivered the message after a multi-agency meeting that reviewed recent signs of renewed speculation. The central bank noted that virtual assets still lack legal currency status and cannot function as lawful payment instruments.
Authorities also stressed that related business operations remain classified as illegal financial activities. Regulators linked the renewed scrutiny to an increase in unofficial trading and mining activity, which they said now poses fresh compliance challenges.
Stablecoins Face Added Pressure
During the meeting, regulators gave stablecoins a lot of attention. The officers identified several shortcomings in anti-money-laundering policies and customer identification by the issuers of stablecoins. They also emphasised the risks of the unapproved transactions between the countries, underground payments, and illegal fundraising.
The central bank said that these operations might compromise financial security because of insufficient measures that are taken to protect them. It also restated its commitment to curb misconduct that is related to stablecoins. Such risks as excessive speculation and broader financial instability are some of the dangers that have been previously threatened by senior Beijing economic officials.
Regulatory Actions Extend Beyond the Mainland
China has still implemented an extensive ban on the trade and mining of cryptocurrencies. Nevertheless, Hong Kong has its regulatory regime on exchanges and stable coin issuers. Even so, Beijing has recently tightened oversight of digital asset initiatives connected to mainland institutions operating in the city.
In recent months, major Chinese brokerages received guidance to halt plans related to tokenized real-world assets. A number of big tech companies were also pressured to halt stablecoin initiatives in the area. Ant Group and JD.com stopped stablecoin plans in Hong Kong due to pressure from Chinese mainland regulators. The actions are a sign of a concerted attempt to avoid regulatory loopholes between Hong Kong and the mainland.
Mining Activity Draws New Attention
In spite of the 2021 national mining ban, miners in a number of provinces have discreetly started up again. According to industry data, unregistered mining activity is increasing in places where cheap electricity is readily available. Certain developments in local data centers have made it easier to engage in covert mining.
In order to evade detection, these operations frequently rely on fragmented setups. The trend has attracted the attention of regulators since they think that it is a sign of a revival of speculative interest. Even though past crackdowns significantly reduced this activity, the government warned that unless vigilance was continued, some recovery was still possible.
Even though China is discouraging individual digital currencies, the nation continues with its pilot of digital yuan. Earlier this year, JD.com and Ant Group proposed a yuan-pegged stablecoin to China’s central bank. In order to preserve financial stability in important markets, officials said they would increase monitoring activities and boost enforcement actions.
