Stablecoins Crackdown: China Bans Offshore Yuan Issuance Without Approval

China has expanded its crackdown on cryptocurrency activity by blocking the overseas issuance of yuan-linked stablecoins without official permission. The policy was confirmed in a joint notice released Friday by the People’s Bank of China and multiple top regulatory agencies.

Bloomberg also reported on Feb. 6 that the new restrictions prohibit any institution or individual, domestic or foreign, from issuing stablecoins pegged to the renminbi outside China unless explicitly approved. Officials cited concerns that such instruments could undermine monetary control and enable cross-border financial risks.

The notice also reiterated Beijing’s longstanding position that cryptocurrencies like Bitcoin, Ether, and commonly used stablecoins do not have a legal status similar to fiat money within mainland China. The authorities again labeled crypto-related business activities in China as illegal financial activities.

Also Read: Strategy to Launch Bitcoin Security Program for Quantum Risks

China Targets Offshore Stablecoins Tied To The Yuan

Stablecoins pegged to national currencies were especially highlighted by regulators as effectively fulfilling some functions of money in circulation. According to the Chinese perspective, offshore yuan-pegged stablecoins involve issues of monetary sovereignty since they could be in circulation globally outside the control of the central bank.

According to the notice, without the consent of relevant departments, no organization is allowed to launch renminbi-pegged stablecoins abroad. At the same time, the authorities pointed out that crypto transactions are still at risk of being abused for money laundering, illegal fundraising, fraud, and unauthorized cross-border money transfers.

As explained by the officials, blockchain technology enables peer-to-peer transactions that do not respect borders in the classical sense, which makes it difficult to control financial risks once they go global. This is why the international regulators and central banks are cautious about the development of stablecoins, said the People’s Bank of China.

Real-World Asset Tokenization Faces Tighter Restrictions

But aside from stablecoins, the regulators in China have also stepped up their scrutiny of the tokenization of real-world assets, which is a developing market that involves the transfer of ownership rights or income streams of real-world assets into blockchain-based tokens.

The notice described the activity as possibly involving illegal token issuance, unauthorized securities offerings, illegal fundraising, or unapproved financial operations. The regulators added that tokenization services, including intermediary platforms and information technology providers, will also be subject to tightened oversight.

Domestic companies trying to tokenize assets overseas with Chinese-based ownership rights will now have to be monitored by bodies such as the National Development and Reform Commission, China Securities Regulatory Commission, and State Administration of Foreign Exchange.

Overseas subsidiaries of Chinese financial institutions offering tokenization services will also have to be incorporated into the domestic monitoring system with enhanced measures for customer screening, suitability, and anti-money laundering practices.

Also Read: Stablecoins Remain Controversial While South Korea Weighs Virtual Asset Rules