In an effort to contain the growing interest in stablecoins, China has ordered local brokerages and other organizations to stop publishing research reports and holding seminars promoting the asset class.
In late July and early August, several leading brokerages and think tanks canceled their events and halted stablecoin research on orders from financial regulators, according to sources familiar with the matter.
Authorities are also concerned that stablecoins could be used as a new tool for fraudulent activities in mainland China. While cryptocurrency transactions are completely banned in the country, some recent official statements have led to speculation that China's approach to the sector may be softening. The approval of Hong Kong's development as a digital asset hub and the stablecoin regulations that came into effect this month, in particular, have increased interest among Chinese companies.
“Chinese policymakers don't want investors to rush en masse into an asset class they don't have enough information about. They want to avoid a herd mentality when the risks are unknown,” said Christopher Wong, a Singapore-based currency strategist at Oversea-Chinese Banking Corp.
Despite China's crypto ban, over-the-counter digital asset transactions reached $75 billion in the first nine months of 2024, according to Chainalysis data. Warnings have been raised in recent months about illicit fundraising activities linked to virtual currencies and stablecoins in regions such as Beijing, Suzhou, and Zhejiang.
*This is not investment advice.
