China’s central bank has reiterated that digital assets remain illegal in the country. The report said virtual currencies and related business activities continue to pose financial risks and do not meet core compliance requirements.
The People’s Bank of China announced that the ban will remain in effect after the November 28 coordination meeting.
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Why does China maintain a strict stance against virtual currencies?
The bank reiterated at the meeting that digital assets do not share the legal status of fiat currency and are not permitted as means of payment in commercial transactions.
It added that business activities related to virtual currencies constitute illegal financial activities under Chinese law.
The People’s Bank of China singled out the stablecoin, claiming it did not meet customer identification and anti-money laundering standards.
This gap leaves it exposed to abuses such as money laundering, fraudulent financing and illegal cross-border capital transfers, the bank said.
“Stablecoins, a type of virtual currency, currently do not effectively meet customer identification and anti-money laundering requirements, creating the risk that they may be used for money laundering, fundraising fraud, and illegal cross-border fund transfers,” a translated version of the statement reads.
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In view of this, Chinese authorities said they remain focused on strengthening risk prevention and ensuring that businesses and individuals comply with the country’s prohibitions.
Meanwhile, the announcement reflects the Chinese government’s continued commitment to strict enforcement even as other jurisdictions pursue more lenient regulatory paths.
China’s stance stands in contrast to broader changes in major economies over the past year.
Governments around the world, including the United States, are introducing frameworks to integrate digital assets into traditional financial markets. These measures encourage industry participation and institutional adoption.
However, China maintained a blanket ban on emerging industries for 2021.
Instead, authorities continue to prioritize the development of e-CNY, a central bank digital currency, to promote digital renminbi in pilot regions and across public sector payment systems.
Interestingly, despite regulations, underground cryptocurrency activity continues within Asia.
The report notes that the use of virtual assets continues in some parts of the country. Reuters recently estimated that China now accounts for 14% of the global Bitcoin mining market, with crypto mining activity quietly making a comeback despite a nationwide ban.
