China warns of rising crypto risks, calls for tighter crackdown

China’s central bank held a meeting on November 28, 2025 with major government agencies to address renewed risks in cryptocurrency trading and speculation.

Authorities reported a rise in illegal activities tied to virtual currencies, which they said pose challenges for financial risk management.

The People’s Bank of China reiterated that virtual currencies, including stablecoins, are not recognized as legal tender and are considered illegal for market use.

Regulators said stablecoins present money laundering and fraud risks due to insufficient customer verification and controls.

The meeting called for stricter enforcement, stronger policy coordination, and improved monitoring of capital and information flows to curb illegal virtual currency activities.

🔗 Source: The National Business Daily

🧠 Food for thought

Implications, context, and why it matters.

China’s crypto crackdown targets stablecoins, but OTC/P2P activity persists

Despite China’s 2021 ban, trading flows through over-the-counter (OTC) and peer-to-peer (P2P) venues 1. Chainalysis, a blockchain analytics firm, says activity has grown since mid-2023 1.
Many investors use crypto to preserve wealth during economic uncertainty 1. Inflows rise when China’s real estate or stock markets fall 1.
Officials at a recent meeting singled out stablecoin risks, while OTC networks keep attracting users 1.
Enforcement calls grew louder, yet cross-border flows and OTC or P2P channels remain hard to shut down 1.

Asia-Pacific (APAC) compliance implications as firms navigate China-related risks

Hong Kong’s August 2025 stablecoin regime requires issuer licensing and limits distribution to “permitted offerors” (authorized intermediaries) 2. It also sets anti-money laundering and countering the financing of terrorism (AML/CFT) standards 2. It adds reserve rules that demand strong compliance controls 2.
Vendors for Know Your Customer (KYC), transaction monitoring, and risk tools can pitch to 77 entities that had signaled interest in Hong Kong stablecoin licences as of August 31, 2025 3.
Singapore’s stablecoin framework took effect in August 2023 4. Crypto custody plus licensing rules started in April 2024, which will push exchanges and issuers to work with compliance providers in Southeast Asia 4.