China vows fresh crackdown on crypto trading after detecting ‘resurgent speculation’

China’s central bank has pledged to intensify enforcement of the country’s cryptocurrency ban after detecting what it described as a resurgence in digital asset trading, following a meeting Saturday with 12 other government agencies.

The People’s Bank of China said “virtual currency speculation has resurfaced” due to various factors, posing new challenges for risk control.

“Virtual currencies do not have the same legal status as fiat currencies, lack legal tender status, and should not and cannot be used as currency in the market,” the central bank said in a statement. “Virtual currency-related business activities constitute illegal financial activities.”

China banned cryptocurrency trading and mining in 2021, citing the need to curb crime and claiming crypto posed risks to the financial system.

Stablecoins flagged as money laundering concern

The central bank specifically highlighted stablecoins as a compliance threat, stating the tokens fail to meet legal requirements and are being used in criminal activities.

“Stablecoins are a form of virtual currency, and currently cannot effectively meet requirements for customer identification and anti-money laundering, posing a risk of being used for illegal activities such as money laundering, fundraising fraud, and illegal cross-border fund transfers,” the bank said.

The bank vowed to “persistently crack down on illegal financial activities” related to cryptocurrencies to “maintain the stability of the economic and financial order.”

The 13 agencies stated they would “deepen coordination and cooperation” in tracking down crypto users by strengthening information sharing and enhancing monitoring capabilities.

Mining activity persists despite ban

The renewed enforcement push comes as cryptocurrency activity continues in China despite the official ban. Reuters reported Wednesday that China had the third-highest share of Bitcoin mining, with its market share reaching 14% by the end of October.

In August, Chinese financial regulators reportedly instructed brokers to cancel seminars and stop promoting research on stablecoins over concerns the tokens could be exploited for fraudulent activities.

Meanwhile, Hong Kong opened applications for stablecoin issuer licenses in July, but some tech companies suspended plans to launch stablecoins in the region after Chinese regulators reportedly intervened to pause the offerings.