China's central bank bans privately issued stablecoins

China’s central bank closed the door on privately issued digital tokens tied to the yuan on Friday, marking the country’s firmest stance yet against cryptocurrencies that mimic its national currency.

The People’s Bank of China teamed up with seven government agencies to announce the prohibition, which blocks anyone from creating stablecoins linked to China’s currency without official permission. The ban reaches beyond China’s borders, covering both local and international companies that might try to launch such products.

Ban applies to all yuan markets

The announcement made clear that these digital coins act too much like real money. “Stablecoins pegged to fiat currencies perform some of the functions of fiat currencies in disguise during circulation and use,” the statement read. “No unit or individual at home or abroad may issue RMB-linked stablecoins without the consent of relevant departments.”

Winston Ma, who teaches at New York University Law School and previously worked as Managing Director at CIC, China’s sovereign wealth fund, explained that the ban covers all versions of Chinese currency. He said that both CNH and CNY fall under the new rules. CNH represents the offshore yuan used in foreign markets, while CNY is the domestic version.

“The Beijing crypto ban rule applies across all RMB-related markets, whether CNH or CNY,” Ma said. He described the move as part of a long-term plan to push speculative cryptocurrencies away from the official financial system while promoting e-CNY, the government-run digital currency.

The timing is consistent with Chinese regulators’ shifting stances over the past few months. Reports surfaced in August 2025 that Beijing might permit private firms to develop stablecoins backed by the yuan, reversing years of stringent regulations. However, by September of that year, officials had already stepped back, telling stablecoin creators to stop or pause their test programs.

Then in January 2026, the central bank approved a significant change: commercial banks could start paying interest to people holding digital yuan in their wallets, making the government currency more appealing.

Digital yuan gains new legal status

The latest crackdown comes as China transforms how its digital yuan operates. Starting January 1, 2026, the PBOC changed the e-CNY’s official classification. Previously treated as a cash replacement, the digital yuan now counts as “digital deposit money.” This shift means banks must pay interest on verified digital yuan accounts, matching rates for regular demand deposits.

Coinbase CEO warns US risks losing stablecoin race as China offers interest on digital yuan
Source: @brian_armstrong

Digital wallets are now covered by the government’s national deposit insurance. With these modifications, the state-backed digital money is now positioned as a clear substitute for return-generating private tokens. Regulators eliminated the primary reason why consumers would prefer privately issued alternatives by providing the e-CNY with these capabilities.

The February 6 directive does more than just ban unauthorized stablecoins. It introduces strict enforcement measures through the Ministry of Industry and Information Technology. The new rules establish “joint liability,” meaning Chinese tech companies, marketing firms, and payment providers can face legal consequences if they help unauthorized stablecoin or tokenized asset projects, even when those projects operate from other countries.

Tokenized real-world assets are likewise prohibited. Making such tokens without permission might be prosecuted as an illegal public securities offering, according to the China Securities Regulatory Commission. Regulators noted that under Chinese law, these token arrangements cannot ensure enforceable rights or legitimate ownership of tangible goods.

This position shows officials view private tokenization projects as threats to financial stability. Instead, the government appears focused on state-controlled blockchain programs that operate under official supervision.

The joint statement came from multiple agencies, including the Ministry of Industry and Information Technology and China’s Securities Regulatory Commission, demonstrating coordinated enforcement across different parts of the government.

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