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

People’s Bank of China Holds Meeting to Crack Down on Virtual Currency Trading and Speculation

The People’s Bank of China recently convened a coordination meeting on combating virtual currency trading and speculation, attended by officials from 13 departments including the Ministry of Public Security and the Central Cyberspace Administration. 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 implemented the requirements of the “Notice on Further Preventing and Handling Risks of Virtual Currency Trading and Speculation” jointly issued by the PBOC and ten other departments in 2021. Significant progress has been made in cracking down on virtual currency trading and speculation, and in rectifying related chaos. Recently, influenced by multiple factors, virtual currency speculation has resurged, with illegal activities occurring from time to time, posing new risks and 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 circulate as currency in the market. Activities involving virtual currencies are illegal financial activities. Stablecoins are a form of virtual currency that currently cannot effectively meet requirements for customer identification, anti-money laundering, and other standards, and pose risks of being used for money laundering, fundraising scams, and illegal cross-border fund transfers.

The meeting called for 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 links such as information flow and capital flow, enhance information sharing, strengthen monitoring capabilities, severely crack down on illegal activities, protect people’s property, and maintain the stability of the economic and financial order.

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) expressed concerns about stablecoin risks in its June 2023 report titled “The Next Generation of Money and Financial Systems,” noting that while stablecoins show some promise in tokenization, they have not yet met the key tests of uniqueness, resilience, and integrity required to become a pillar of the monetary system. The report states that the future role of stablecoins in the monetary system remains to be seen.

Since the beginning of this year, financial regulators in various parts of China have observed that some illegal organizations, under the guise of “financial innovation,” “digital currency,” “digital assets,” and “blockchain technology,” have been raising funds through issuing or speculating on investment projects with new concepts as gimmicks, promising high returns and inducing public participation in trading and speculation. Currently, many local financial regulators 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 agencies to crack down on domestic virtual currency operations and speculation, maintain financial order, and closely monitor and dynamically assess the development of offshore stablecoins.