Virtual currency speculation and hype are on the rise; thirteen departments jointly crack down on illegal financial activities

The People’s Bank of China recently held a meeting to coordinate efforts to crack down on virtual currency trading and speculation, attended by officials from 13 departments including the Ministry of Public Security and the Cyberspace Administration of China. The meeting emphasized the continued enforcement of the ban on virtual currencies and the ongoing crackdown on illegal financial activities related to virtual currencies.

The meeting noted that in recent years, various agencies have strictly enforced the policies outlined in the 2021 joint notice by the PBOC and ten other departments on preventing and managing risks associated with virtual currency trading and speculation. These efforts have achieved significant results in rectifying chaos in the virtual currency market. Recently, due to multiple factors, virtual currency speculation has resurged, with illegal activities occurring from time to time, posing new challenges for risk prevention and control.

The meeting stressed that virtual currencies do not have the same legal status as legal tender, lack legal enforceability, and should not and cannot be used as currency in the market. Activities related to virtual currencies are considered illegal financial activities. Stablecoins are a form of virtual currency that currently cannot effectively meet requirements for customer identification and anti-money laundering, and pose risks of being used for money laundering, fundraising scams, and illegal cross-border fund transfers.

The meeting called on all units to treat risk prevention as an ongoing priority in financial work, uphold the ban on virtual currencies, and continue to crack down on illegal financial activities related to virtual currencies. Agencies should deepen coordination, improve regulatory policies and legal frameworks, focus on key areas such as information flow and capital flow, enhance information sharing, strengthen monitoring capabilities, and severely crack down on illegal activities to protect people’s property and maintain financial and economic stability.

In recent years, virtual currencies issued by market institutions, especially stablecoins, have continued to emerge, but the overall development is still in its early stages. International financial organizations and central banks generally adopt a cautious attitude toward the development of stablecoins. The Bank for International Settlements (BIS) released a report in June titled “Next Generation Money and Financial Systems,” which explicitly expressed concerns about the risks of stablecoins. The report acknowledged some prospects for tokenization but stated that stablecoins have not yet met the key criteria of uniqueness, resilience, and integrity to become a pillar of the monetary system. It concluded that the future role of stablecoins in the monetary system remains to be seen.

Since the beginning of this year, financial regulators across China have observed that some illegal organizations are using terms like “financial innovation,” “digital currency,” “digital assets,” and “blockchain technology” to promote investment projects with new concepts as a lure to raise funds, promising high returns and inducing public participation in trading and speculation. Currently, many regulatory agencies and industry self-regulatory organizations have issued risk alerts, emphasizing that stablecoins are not tools for investment or speculation.

PBOC Governor Pan Gongsheng previously stated at the 2025 Financial Street Forum that the central bank will continue to work with law enforcement to crack down on domestic virtual currency operations and speculation, maintain financial order, and closely monitor and assess the development of offshore stablecoins.

(Edited by: Wen Jing)

Keywords: Virtual Currency