In an effort to control the increasing interest in stablecoins, China has taken a stand by ordering local brokerages and other organizations to cease publishing research reports and hosting seminars promoting this asset class.
During late July and early August, several top brokerages and think tanks have reportedly canceled their events and stopped conducting stablecoin research following directives from financial regulators.
Authorities in China are also wary of the potential misuse of stablecoins as a tool for fraudulent activities within the mainland. While cryptocurrency transactions are prohibited in the country, recent official statements have sparked speculation that China may be adopting a more lenient stance towards the sector. The recent approval of Hong Kong’s development as a digital asset hub and the implementation of stablecoin regulations have piqued the interest of Chinese companies.
Christopher Wong, a currency strategist at Oversea-Chinese Banking Corp based in Singapore, noted, “Chinese policymakers are cautious about investors flocking to an asset class without sufficient knowledge. They aim to prevent a herd mentality when the risks are not fully understood.”
Despite the ban on cryptocurrencies in China, over-the-counter digital asset transactions totaled $75 billion in the first nine months of 2024, as per Chainalysis data. Concerns have been raised about illicit fundraising activities associated with virtual currencies and stablecoins in areas like Beijing, Suzhou, and Zhejiang in recent months.
*Please note that this article does not constitute investment advice.