China’s Central Bank Slams Stablecoins as “Dangerous Loopholes” in Global Finance Regulation
China’s financial regulators have issued a stark warning to the global markets, stating that privately issued stablecoins may represent “dangerous loopholes” in the international financial system and pose material risks to monetary sovereignty, capital controls, and AML/CFT frameworks.
In published by state media, People’s Bank of China (PBoC) Governor Pan Gongsheng said that the rapid rise of dollar-backed tokens such as USDT and USDC could “undermine international payment systems” and allow cross-border capital movements that bypass regulatory controls.
Beijing views Stablecoins as a Threat to Global Finance
In recent remarks, Pan Gongsheng stated that stablecoins have the potential to undermine global payment and settlement systems, especially when issued, circulated or redeemed across jurisdictions with limited regulatory oversight. His comments align with a series of recent actions, as earlier this year instructed brokers and think-tanks to suspend stable coin research and promotion.
The current concerns drive diverse narratives, including the idea that a global stable coin could erode a state’s monetary sovereignty, such as its ability to regulate the money supply and interest rates. The position also reiterates the ideology that stable coins denominated in foreign currencies can facilitate rapid fund transfers across borders, sidestepping capital controls.
Beijing also opines that the decentralized issuance and redemption frameworks of many stablecoins could allow illicit usage or destabilising flows without appropriate oversight. These views are consistent with China’s broader strategy to promote the , which is a digital form of China’s fiat currency and a legal tender backed by the People’s Bank of China (PBOC) — and expand the yuan’s role internationally while maintaining strict control of its domestic financial system.
How China’s Stablecoin Stance Compares to Others
While China views stablecoins as a financial threat, other leading economies have adopted more nuanced, but relatively cautious approaches. For instance, in the US, Washington is developing a comprehensive , which would place stable coin issuers under federal oversight but still allow their operation within defined limits.
The European Union’s MiCA (Markets in Crypto-Assets) framework classifies stablecoins as “asset-referenced tokens” and subjects them to licensing, reserve, and disclosure rules under the European Banking Authority. The focus is on integration, not prohibition, aiming to create a compliant path for digital finance innovation.
Even Singapore and Hong Kong have sought to balance innovation and risk, introducing tiered regulatory regimes for stablecoins backed by fiat. Singapore’s Monetary Authority (MAS) recently approved the first fully licensed stablecoins, while Hong Kong’s HKMA continues to test digital asset pilots.
By contrast, China’s position remains singularly restrictive, viewing stablecoins not as innovation tools but as potential channels for dollar influence, capital evasion, and financial instability. This divergence underscores the need to move aways from fragmentation in global digital finance policy, where major economies differ sharply on how to integrate crypto within regulated systems, especially if stable coins will become globally acceptable.
