China’s Central Bank Calls Stablecoins a ‘Threat,’ Vows Crackdown: Report

Core Viewpoint - The People's Bank of China (PBoC) has issued a strong warning against stablecoins, labeling them a threat to global financial stability and committing to intensifying its crackdown on domestic cryptocurrency activities [1][2]. Group 1: Stablecoins and Financial Stability - Pan Gongsheng, governor of the PBoC, stated that stablecoins, which are digital assets pegged to fiat currencies, have introduced new vulnerabilities into the global financial system and could undermine the monetary sovereignty of smaller economies [2][5]. - He emphasized that stablecoins have exacerbated weaknesses in the global financial system, particularly through their involvement in market speculation and non-compliance with essential regulations such as customer identification and anti-money laundering (AML) standards [3][4]. - The PBoC's measures against cryptocurrency activities have been described as "effective," maintaining a zero-tolerance policy towards private digital currencies since 2017 due to financial risks and potential consumer harm [4]. Group 2: Regulatory Actions and Future Monitoring - The central bank plans to continue collaborating with law enforcement to combat cryptocurrency operations and speculative activities within mainland China [3]. - Pan indicated that the PBoC would closely monitor the development of stablecoins in overseas markets, reflecting concerns about how foreign stablecoin growth could impact China's financial stability [5]. - The total market capitalization of stablecoins has reached approximately $308 billion, with Tether (USDT) and USD Coin (USDC) making up nearly 87% of the supply, highlighting the significant presence of these assets in the market [6].