China’s central bank renewed its strict stance on virtual currencies, warning that speculation is rising again and pledging to crack down on illegal stablecoin activities.
The People’s Bank of China (PBOC) said during a coordinating meeting on virtual currency regulation on Friday that crypto speculation has surged recently, creating new challenges for financial oversight.
“Virtual currencies are not equivalent to legal tender and cannot be used in everyday transactions,” the PBOC stated. It also said that business activities involving cryptocurrencies remain illegal.
The central bank specifically raised concerns about stablecoins, noting they often fail to meet rules for customer identification and anti-money-laundering safeguards. It added that these digital assets could be exploited for illegal purposes, including fraud, money laundering, and unauthorized cross-border transfers.
In a related statement in October, PBOC Governor Pan Gongsheng said the central bank would continue cracking down on domestic crypto operations and speculation. He also said authorities would closely monitor and assess developments in overseas stablecoins.
Meanwhile, Hong Kong has implemented a regulatory framework for stablecoins but has not yet granted any licences to issuers. In mainland China, cryptocurrency trading has remained banned since 2021.
Despite these restrictions, Bitcoin mining is quietly making a comeback in China. Individual and corporate miners are taking advantage of cheap electricity and a growing data centre sector in energy-rich provinces, according to miners and industry data.
The resurgence of mining has sparked concerns about regulatory compliance. Consequently, authorities are monitoring operations that could violate China’s existing crypto bans.
Furthermore, analysts say the revival of mining may signal continued demand for virtual currencies in the region, even as the central bank maintains its firm stance.
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Multiple companies are paying attention
Some experts note that while official trading remains illegal, underground activity can persist when market conditions, such as low energy costs, favour miners. In addition, companies in energy-rich provinces may see financial incentives to host mining operations despite the ban.
Publicly listed companies related to blockchain or energy provision, including Tesla Inc (NASDAQ: TSLA) and Marathon Digital Holdings (NASDAQ: MARA), are observing developments closely, as shifts in China’s energy and regulatory landscape can influence global mining operations.
China’s issues with cryptocurrency trace back to 2017, when the country became a global hotspot for crypto trading and ICOs. At the time, investors were pouring money into Bitcoin, Ethereum, and other digital assets, often without understanding the risks. The government viewed the rapid growth of the market as a threat to financial stability. Further, it cited concerns about fraud, speculative bubbles, and money laundering.
In September 2017, Chinese authorities banned ICOs, calling them illegal fundraising schemes, and soon after shut down domestic cryptocurrency exchanges. These moves forced retail and institutional trading offshore, but crypto activity did not disappear—it shifted underground or moved overseas.
Despite the ban, mining activity thrived for several years, particularly in provinces with cheap electricity. By 2021, the Chinese government escalated enforcement, citing environmental and financial risks, and ordered the closure of crypto mining operations.
Authorities also reinforced that digital currencies like Bitcoin hold no legal status. Furthermore, any trading or financial services involving them are illegal. Since then, China has focused on controlling financial risks, cracking down on illegal stablecoins, and promoting its own central bank digital currency (CBDC), the digital yuan.
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