China Doubles Down on Crypto Ban in 2025: Stablecoins Face Crackdown as Digital Yuan Advances

• Why Has China Declared Cryptocurrencies Illegal Again in 2025?
• Stablecoins Under Fire: What’s Behind China’s Warning?
• Hong Kong’s Crypto Ambitions vs. Beijing’s Control
• Digital Yuan Surges Ahead as Private Crypto Falters
• Zhou Xiaochuan’s Stark Warning on Stablecoins
• What Does This Mean for the Crypto Market?
• FAQs

China has reaffirmed its hardline stance against cryptocurrencies, declaring them illegal and warning of the risks posed by stablecoins. The People’s Bank of China (PBoC) emphasized that crypto activities remain banned, with strict enforcement measures in place. Meanwhile, the country is pushing forward with its digital yuan, which has already surpassed 225 million wallets in its pilot phase. Hong Kong’s crypto-friendly policies stand in stark contrast, though they operate under Beijing’s watchful eye. Former PBoC governor Zhou Xiaochuan’s recent warnings about stablecoins add weight to the regulatory crackdown. For investors hoping for a policy shift, this announcement makes it clear: China’s crypto doors are firmly shut.

Why Has China Declared Cryptocurrencies Illegal Again in 2025?

China’s central bank, the PBoC, recently convened a high-level meeting with representatives from 13 regulatory bodies to address a resurgence in crypto speculation. The message was unequivocal: cryptocurrencies have no legal status in China, cannot be used as currency, and all related activities will face severe crackdowns. The 2021 blanket ban on crypto trading and mining remains in full force, with authorities claiming it has successfully restored "order" in the VIRTUAL currency market. The PBoC stated that the ban has yielded "significant results," and there are no plans to reverse course. Instead, regulators are tightening enforcement to prevent crypto activities from slipping through the cracks.

Stablecoins Under Fire: What’s Behind China’s Warning?

Stablecoins took center stage in the PBoC’s announcement—and not in a good way. The bank criticized them for failing to meet basic regulatory standards, such as Know-Your-Customer (KYC) checks and anti-money laundering (AML) controls. But this isn’t just bureaucratic nitpicking. The PBoC linked stablecoins to serious risks, including fraudulent fundraising, illegal cross-border flows, underground payments, and broader financial instability. From Beijing’s perspective, stablecoins create parallel channels for value movement outside state supervision—a red line, especially as China rolls out its digital yuan. The message was clear: stablecoins are untrustworthy, non-compliant, and unwelcome.

Hong Kong’s Crypto Ambitions vs. Beijing’s Control

While mainland China cracks down, Hong Kong has spent the last two years positioning itself as a regulated hub for digital assets. Licensing frameworks for exchanges and stablecoin issuers are already in motion. But despite Hong Kong’s autonomy, Beijing’s influence is undeniable. Recently, Chinese regulators intervened to slow Hong Kong’s progress in asset tokenization and instructed tech giants to shelve plans for proprietary stablecoins. It’s a delicate balancing act: Hong Kong can explore crypto under strict conditions, but only if it doesn’t spill over to the mainland or undermine China’s financial controls.

Digital Yuan Surges Ahead as Private Crypto Falters

As private digital assets face suppression, China is doubling down on its central bank digital currency (CBDC), the digital yuan. The pilot program has already exceeded 225 million personal wallets, making it one of the largest CBDC experiments globally. For Beijing, this is the future of digital money: centralized, programmable, and fully monitored. By questioning the legitimacy of stablecoins, China indirectly bolsters the narrative around its state-backed digital currency. The goal? Digital payments—but only on its terms.

Zhou Xiaochuan’s Stark Warning on Stablecoins

Adding fuel to the fire, former PBoC governor Zhou Xiaochuan recently warned that stablecoins could easily become tools for speculation and fraud without stringent regulation. Speaking at a closed-door seminar earlier this year, Zhou stressed that if stablecoins deviate from their intended purpose, they risk destabilizing the financial system. Given his 16-year tenure at the PBoC, his words carry significant weight and align with the central bank’s broader messaging.

What Does This Mean for the Crypto Market?

China isn’t reopening its doors to crypto anytime soon. This latest announcement slams shut any remaining windows. The government views speculative digital assets as systemic risks, stablecoins as compliance failures, and the digital yuan as the only acceptable path forward. Investors hoping for a policy reversal should think again. Meanwhile, Hong Kong will continue building its regulated crypto ecosystem—but always under Beijing’s watchful eye. If the global market expected a friendlier tone from China, this statement makes it clear: don’t hold your breath.

FAQs

Why did China ban cryptocurrencies again in 2025?

China reaffirmed its 2021 ban to curb speculation and maintain financial control, citing risks like fraud and capital flight.

Are stablecoins completely banned in China?

While not explicitly banned, stablecoins face severe restrictions due to non-compliance with KYC/AML rules and perceived threats to financial stability.

How is Hong Kong affected by China’s crypto policies?

Hong Kong can pursue crypto innovation but must avoid undermining Beijing’s financial controls or influencing mainland markets.

What’s the status of China’s digital yuan?

The digital yuan pilot has surpassed 225 million wallets, positioning it as a leading CBDC project globally.