China warns of stablecoin risks to the financial system
People’s Bank of China (PBOC) Governor Pan Gongsheng delivered sharp remarks on the risks stablecoins pose to the global economy.
He warned that the rapid spread of such instruments amplifies global financial vulnerabilities, enables regulatory evasion, and could undermine the monetary sovereignty of developing nations.
Pan noted that stablecoins still fail to meet core regulatory standards such as customer identification (KYC) and anti–money laundering (AML) compliance. This, he said, creates conditions for illegal cross-border transfers, terrorism financing, and speculation – all of which increase instability in the global financial system.
Stablecoins widen gaps in global regulation, increase the fragility of the financial system, and impact the currency sovereignty of some developing economies,” Pan said during the Financial Street Forum 2025 in Beijing.
The central bank confirmed it will continue working with law enforcement to tighten restrictions on virtual currency operations and speculative trading within China. These comments reaffirm Beijing’s long-standing stance, first established in 2017, when the country banned cryptocurrency trading and ICOs.
Meanwhile, Chinese regulators plan to closely monitor the development of stablecoins abroad, especially their integration with global payment systems and DeFi protocols. The latest statements from Beijing could increase pressure on international issuers such as Tether (USDT) and USDC if they are seen as threats to currency stability in emerging markets.
China continues to advance its own central bank digital currency, the e-CNY, positioning it as a regulated alternative to private stablecoins and a tool for tighter control over capital flows.
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