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

Securities Times reporter He Jueyuan

Recently, the People’s Bank of China convened a meeting of the interagency coordination mechanism for combating virtual-coin trading and speculation. Representatives in charge from 13 departments, including the Ministry of Public Security and the Central Cyberspace Administration, attended the meeting. The meeting called for continuing to uphold a prohibition policy toward virtual currencies and to steadily crack down on related illegal financial activities.

The meeting noted that in recent years, in accordance with the requirements of the “Notice on Further Preventing and Addressing Risks of Virtual Currency Trading and Speculation” jointly issued in 2021 by the People’s Bank of China and 10 other departments, relevant entities have firmly cracked down on virtual-currency trading and speculation, rectified disorder in the virtual-currency sector, and achieved notable results. Recently, influenced by multiple factors, speculation and hype in virtual currencies have picked up, related违法犯罪 activities have occurred from time to time, and risk prevention and control faces a new situation and new challenges.

The meeting emphasized that virtual currencies do not have the same legal status as fiat currency, do not have settlement functionality, and therefore should not and cannot be used as money to circulate in the market. Business activities related to virtual currencies fall under illegal financial activities. Stablecoins are a form of virtual currency. At present, they cannot effectively meet requirements such as customer identity verification and anti–money laundering, and there is a risk of being used for illegal activities such as money laundering, fundraising fraud, and improper cross-border transfer of funds.

This meeting requires that all units treat risk prevention and control as an enduring theme of financial work, continue to uphold the prohibition policy toward virtual currencies, and steadily crack down on illegal financial activities related to virtual currencies. All units should deepen coordination and cooperation, improve regulatory policies and legal bases, focus on key links such as information flows and capital flows, strengthen information sharing, further enhance monitoring capabilities, severely crack down on illegal and criminal activities, protect the property safety of the people, and maintain stable economic and financial order.

In recent years, virtual currencies issued by market institutions—especially stablecoins—have continued to emerge, but overall they are still in the early stages of development. Financial management departments such as international financial organizations and central banks generally take a prudent attitude toward the development of stablecoins. In a report titled “The Next Generation of Money and Financial Systems” released by the Bank for International Settlements (BIS) in June of this year, the BIS clearly expressed concerns about stablecoin risks. It pointed out that while stablecoins show some promise in tokenization, they still have not met the requirements to become a pillar of the monetary system in the three key tests of singleness, resilience, and integrity. The report believes that what role stablecoins will play in future monetary systems remains to be seen.

Since this year began, financial regulators in various parts of China have noticed that some illegal institutions, under the pretext of “financial innovation,” “digital currency,” “digital assets,” “blockchain technology,” and other such names, have been raising funds through investment projects that use novel concepts as bait, such as by issuing or hyping them, promising high returns, and inducing the public to participate in trading and speculation. At present, many local financial regulators or industry self-regulatory organizations have issued risk warnings, emphasizing that stablecoins are not tools for investment or speculation.

Earlier, Pan Gongsheng, Governor of the People’s Bank of China, said at the 2025 Financial Street Forum Annual Conference that the central bank will, together with law-enforcement departments, continue to crack down on the operation and speculation of virtual currencies within China, and maintain economic and financial order, while also closely tracking and dynamically assessing the development of stablecoins overseas.

(Editor: Wen Jing)

Keywords:

                                                            Virtual currency