China Fires a Fresh Warning Shot at Crypto: Stablecoins Under Scrutiny as Underground Mining Surges

Image taken from cnbc.com

China’s central bank has once again drawn a bold red line around the world of digital currencies, signalling that the recent revival in crypto activity has not gone unnoticed. In a newly released statement, the People’s Bank of China (PBOC) said speculation in virtual assets has picked up recently, creating fresh risks at a time when regulators are trying to keep financial stability tight and predictable.

The PBOC reminded the public of its long-standing position: digital tokens are not the same as government-issued currency, and they cannot legally be used like one. Any business built around trading, handling, or promoting these assets continues to fall under the category of illegal financial activity in mainland China.

This time, the central bank placed a sharp spotlight on stablecoins — tokens that claim to maintain a steady value. Regulators say these instruments frequently fail basic compliance checks, especially around customer identification and anti–money laundering systems, making them vulnerable tools for fraud, illicit transfers, and cross-border fund movement that escapes official oversight.

China’s stance is not softening anytime soon. The central bank said it will intensify its crackdown on crypto-linked activities to protect the broader economy. Back in October, PBOC Governor Pan Gongsheng made it clear that the country intends to monitor both domestic speculation and the fast-evolving stablecoin industry abroad.

Interestingly, while Hong Kong has built a formal regulatory framework for stablecoins, it has yet to approve a single issuer. On the mainland, although crypto trading and mining have been banned since 2021, the story on the ground is shifting. Bitcoin mining — once a dominant industry in China — is quietly resurfacing. Small and large miners alike are capitalising on low-cost electricity and the rapid growth of data centres in energy-rich regions, giving the activity an unexpected second wind.

For China, the message remains consistent: crypto is not welcome as a financial system participant. But beneath the surface, the country’s massive energy ecosystem continues to feed a part of the crypto world it once tried to shut down.