China urges brokers and think tanks to halt stablecoin promotion amid fraud concerns

Chinese financial regulators have instructed local brokerages and think tanks to cease promoting stablecoins through studies and public events amid concerns that the digital assets could be exploited for fraud, Bloomberg reported Friday, citing people with knowledge of the matter.

Regulators were said to have issued guidance in late July and early August urging the groups to call off seminars and halt the dissemination of stablecoin-related research.

“Chinese policymakers don’t favor too much fanfare in some topics just to avoid a herd rush to any particular asset class,” Christopher Wong, a Singapore-based currency strategist at Oversea-Chinese Banking Corp, told Bloomberg, noting that regulators don’t want stablecoins to become the next speculative craze, especially among retail investors who may not fully understand the risks.

The quiet clampdown came despite some recent official remarks, including from PBOC Governor Pan Gongsheng in June, which suggested a more open stance toward certain forms of crypto, especially those pegged to the yuan, which fueled speculation China might be warming to the industry.

The move may signal that Beijing wants to keep any crypto-related developments firmly on its own terms.

Mainland China still outlaws crypto-related transactions, yet OTC digital asset trading surged to $75 billion in the first nine months of 2024, Chainalysis estimates indicate.

The regulatory move follows recent developments in Hong Kong, where new legislation governing stablecoin issuers was introduced. Hong Kong has granted licenses to 11 crypto exchanges and 44 companies to trade digital assets for clients, including Chinese state-backed firms like CMB International Securities, Guotai Junan Securities (Hong Kong), and TFI Securities and Futures.