The central bank teams up with 13 departments to crack down hard on crypto scams, with stablecoins becoming the focus of regulatory storms

The People’s Bank of China recently held a multi-department coordination meeting and issued the strongest warning against virtual currency-related scams. This joint crackdown involving 13 government departments marks a new stage in the central bank’s efforts to prevent fraud risks in the crypto space since the comprehensive ban on cryptocurrency trading and mining in 2021. Currently, virtual currency speculation is resurging, and related illegal activities are emerging endlessly. Crypto scams have become a new focus of financial risk prevention and control.

Stablecoins Become Tools for Scams, Central Bank Issues Warning on Money Laundering and Fundraising Risks

At the “Coordination Mechanism Meeting on Combating Virtual Currency Trading and Speculation” held by the central bank on November 28, stablecoins were singled out as a key regulatory target. The central bank explicitly stated that stablecoins “cannot effectively meet customer identification, anti-money laundering, and other requirements,” making them a breeding ground for scams in the crypto space, with high risks of being exploited for money laundering, fundraising scams, and illegal cross-border fund transfers.

Unlike traditional financial instruments, stablecoins are being used by scammers for illegal financing due to their ease of cross-border circulation and low transaction thresholds. Victims often invest funds under promises of high returns, and ultimately, the funds are transferred across borders via stablecoins, making recovery difficult. This has become one of the most covert and hardest-to-regulate methods in current crypto scams.

Risks Rebound After 2021 Ban, Virtual Currency Scams Occur Occasionally

China’s regulation of virtual currencies has not weakened. As early as 2017, the central bank imposed a comprehensive ban on cryptocurrency trading; since 2021, it has also fully prohibited cryptocurrency mining. Under joint rectification efforts over these years, the chaos in the virtual currency sector was significantly curbed.

However, recently, due to various factors, speculation in virtual currencies has resurged, and crypto scam activities have begun to rebound. The central bank stated that related illegal activities “occur from time to time,” which not only threatens investors’ asset safety but also poses risks to financial stability. In response, the central bank, the Ministry of Public Security, the Cyberspace Administration of China, and 10 other government departments have decided to continue strengthening monitoring and information sharing, and to crack down severely on illegal activities involving crypto scams.

Hong Kong’s Crypto Industry Flourishes While Mainland Bans Create Contrast; International Stablecoin Projects Halted

Contrasting sharply with mainland China’s strict policies, Hong Kong has actively promoted the development of the cryptocurrency industry in recent years. Hong Kong has established licensing systems for exchanges and stablecoin issuers, aiming to attract international crypto companies.

This difference has sparked interest among domestic companies. Ant Group and JD.com had planned to issue “offshore RMB” stablecoins in Hong Kong to seize market opportunities. However, after the People’s Bank of China and the Cyberspace Administration of China explicitly required “not to continue pushing forward” with these plans, both companies have temporarily suspended their projects. This reflects that, despite Hong Kong’s regulatory flexibility, the influence of mainland policies remains decisive, especially when it comes to financial risks and scam prevention in the crypto space.

Prevent Crypto Scams, Investors Must Stay Vigilant

In light of the central bank’s firm stance, ordinary investors should also enhance their awareness of crypto scams. Virtual currency trading lacks effective regulation, and scammers use high returns promises, false projects, exit scams, and other tactics to deceive. The cross-border nature of stablecoins further lowers the cost and difficulty of scams.

Investors should recognize that any virtual currency investment claiming “risk-free high returns” carries risks. When dealing with stablecoins involving personal data and large fund transfers, extra caution is necessary. Preventing crypto scams requires rational judgment and full awareness. The joint actions by the central bank and other departments aim to protect people’s property and maintain financial order, and investors’ risk awareness is equally essential.