The People’s Bank of China held an interagency meeting dedicated to intensifying the crackdown on illegal activities and speculation in the cryptocurrency market, announcing stricter control measures.
A meeting of the coordination mechanism for combating speculation with virtual currencies took place in Beijing, organized by the People’s Bank of China (PBoC) and bringing together eleven relevant ministries and agencies of the PRC.
Regulators paid special attention to the legal status of virtual currencies. It was emphasized that cryptocurrencies don’t possess the characteristics of legal tender, have no mandatory debt settlement force, and can’t be used as money in circulation.
Any financial activity involving virtual assets is declared illegal. In particular, regarding stablecoins, authorities noted that they’re incapable of ensuring the necessary level of customer verification and anti-money laundering controls, creating additional risks of their use in fraudulent schemes, illegal investment projects, and unlawful cross-border transfers.
It was noted that the restrictive measures introduced in 2021 significantly reduced the volume of illegal crypto circulation and curbed major violations. However, in recent months, speculative activity rose again. New schemes of illegal transactions, fraud, and attempts to bypass restrictions when transferring funds across borders were recorded.
Following the discussion, the agencies were instructed to strengthen their joint efforts, update the regulatory framework, and expand tools for monitoring information and financial flows. The authorities intend to deepen the exchange of operational data, enhance the detection of illegal transactions, and improve the effectiveness of investigations.
The main goal set by Chinese regulators is to protect citizens’ property and ensure the stability of the financial system amid increasing activity from illegal participants in the virtual asset market.
The announced restrictive measures apply to mainland China. Meanwhile, Hong Kong, holding a special administrative status within the PRC, has enjoyed tacit support from Beijing since 2023 in developing its local cryptocurrency industry. As a result, by the end of 2024, the jurisdiction was recognized as one of the global leaders in Web3 development.
