China Orders Brokers Halts on Stablecoin Promotions to Avoid Instability

The Chinese government is intensifying its regulatory oversight of stablecoins, instructing local financial institutions to halt the publication of research and the hosting of promotional seminars related to this asset class.

This move highlights the government’s cautious approach to cryptocurrencies and its determination to maintain financial stability, even as Hong Kong embraces digital asset innovation.

Additionally, Bloomberg revealed that leading brokerages and think tanks received guidance from financial regulators in late July and early August, urging them to cease disseminating research and cancel seminars focused on stablecoins.

China Halt Stablecoin Promotion

Based on the official statement, the halt order has not come without reason. Concerns that fraudsters could exploit stablecoins in mainland China, where crypto-related transactions are banned, prompted authorities to issue a halt order.

Moreover, these stricter rules appeared when government statements had led people to think China might change its view on crypto. Hong Kong has established itself as a center for digital assets and recently passed laws for stablecoin companies. These actions have made companies in mainland China more interested.

Despite the official ban, over-the-counter digital asset trading persists in China. Chainalysis Inc. estimates that such trading reached $75 billion in the first nine months of 2024, indicating the continued presence of avenues for these transactions.

However, policymakers are hesitant to encourage the broad use of digital money until there’s a complete set of rules. They want to keep the financial system steady and protect investors. The source says that if people are unfamiliar with digital money, they might buy things without understanding the dangers.

Rapid Shift in Stablecoin Adoption

Stablecoins, typically backed by cash-like assets and issued by private firms, are gaining prominence as a faster and cheaper alternative for cross-border payments. The majority are pegged to the United States dollar and backed by US assets, with projections indicating a global supply of up to $3.7 trillion by 2030.

Meanwhile, the US is also moving towards regulating stablecoins, with President Donald Trump signing the first federal bill on July 18.

Hong Kong, often seen as a regulatory sandbox for China, has emerged as a key player in the digital asset space, granting licenses to 11 crypto exchanges and 44 companies authorized to trade digital assets for clients.

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