China's central bank vows crackdown on virtual currency, flags stablecoin concerns

BEIJING, Nov 29 (Reuters) – China's central bank reaffirmed its tough stance on virtual currencies on Saturday, warning of a resurgence in speculation and vowing to crack down on illegal activities involving stablecoins. The People's Bank of China (PBOC) said at a coordinating meeting on virtual currency regulation on Friday that crypto speculation has recently increased due to various factors, presenting new challenges for risk control, according to a statement released by the central bank. "Virtual currencies do not hold the same legal status as fiat currency and cannot be used as legal tender in the market," the PBOC said in a statement, adding that virtual currency-related business activities are "illegal financial activities." The central bank specifically highlighted concerns about stablecoins, saying they fail to meet requirements for customer identification and anti-money-laundering controls.  It warned that stablecoins risk being used for illegal activities including money laundering, fraud, and unauthorized cross-border fund transfers. The central bank said it will "intensify efforts to combat related illegal financial activities" and "to maintain economic and financial stability." In October, PBOC Governor Pan Gongsheng said the central bank would continue to crack down on the operation and speculation of domestic virtual currencies, and at the same time closely track and dynamically evaluate the development of overseas stablecoins. Hong Kong, which has established a regulatory regime for stablecoins, has not yet awarded any licences to issuers. In China, cryptocurrency trading has been banned since 2021. Bitcoin mining is quietly staging a comeback in China despite being banned four years ago, as individual and corporate miners exploit cheap electricity and a data center boom in some energy-rich provinces, according to miners and industry data. (Reporting by Ziyi Tang and Ryan Woo; Editing by Toby Chopra)

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