Beijing Cracks Down on Stablecoins as Hong Kong Backs Issuer Rules

Beijing is tightening its grip on stablecoin activity, directing top financial institutions to halt all promotion of the digital asset class. Regulators have ordered brokerages, think tanks, and research groups to cancel stablecoin seminars and stop publishing related content in a bid to curb speculative risks and rising hype.

The move reflects growing unease in China over fraud, illegal capital raising, and retail investor mania. Authorities in Shenzhen have issued public warnings about scams disguised as stablecoin investments, highlighting national concerns over these crypto instruments.

While the mainland officially prohibits crypto-related transactions, over-the-counter (OTC) trades remain active. Chainalysis predicts OTC flows in China could reach $75 billion by year-end.

Hong Kong, meanwhile, is embracing stablecoin regulation, positioning itself as a digital finance hub. This contrast underscores the divergent approaches within Greater China: Beijing favors digital yuan expansion while cracking down on dollar-pegged stablecoins, even as the US pushes for regulated dollar-backed alternatives.