China Cracks Down on Crypto as Asia Launches Stablecoins

People’s Bank of China Governor Pan Gongsheng delivered a firm message during a recent Beijing conference, stating that “the policies and measures rolled out by PBOC to combat cryptocurrency-related risks are still effective.” The central bank will continue working with law enforcement to “crack down on relevant activities within mainland China to safeguard economic and financial order,” according to reports from The Standard (HK). This represents a continuation of China’s comprehensive ban on cryptocurrency trading and mining that began in 2021.

Governor Pan specifically targeted stablecoins as a particular concern, noting they “can’t meet the basic requirements like customer identification and anti-money laundering.” He further warned that stablecoins are “increasing the vulnerability of the global financial system and undermining the monetary sovereignty of some less developed economies.” The PBOC committed to “closely monitor and assess the development of stablecoins in overseas markets,” indicating ongoing vigilance despite domestic restrictions.

While China maintains its restrictive posture, Japan and South Korea are moving in the opposite direction. On the same day as Governor Pan’s remarks, Japanese startup JPYC launched the world’s first yen-backed stablecoin, also called JPYC, with ambitious plans to issue $66 billion (10 trillion yen) worth of tokens over three years. This represents a significant milestone in Japan’s embrace of regulated digital assets.

South Korea has similarly entered the stablecoin arena with KRW1, the country’s first fully regulated won-backed stablecoin. Developed through digital custodian BDACS and Woori Bank on the Avalanche blockchain, KRW1 represents South Korea’s methodical approach to digital asset integration. The contrast between China’s prohibition and its neighbors’ regulated adoption highlights the divergent strategies emerging across Asian financial markets.

The regional activity extends beyond national initiatives. Bank of China’s Hong Kong shares surged recently on reports it plans to apply for a stablecoin license, while Standard Chartered has also expressed interest in the space. Market sentiment appears bullish, with users on Myriad—a product of Decrypt’s parent company DASTAN—predicting the stablecoin market cap will surpass $360 billion before February.

Despite mainland restrictions, Chinese technology giants are actively exploring stablecoin opportunities in offshore jurisdictions. Jack Ma’s Ant Group has applied for an “ANTCOIN” trademark in Hong Kong, covering stablecoins, token issuance, and transfers. Simultaneously, JD.com plans to seek overseas licenses to use stablecoins for cross-border B2B payments before potentially extending services to consumers.

Ray Youssef, CEO of crypto app NoOnes, provided context for China’s regulatory position, noting that “the role of Chinese regulators in shaping global stablecoin regulation has developed against a backdrop of relative financial stability and the absence of sanction-related pressure.” He suggested that “China’s stance on stablecoins, which in many ways mirrors that of the EU, could eventually shift in the opposite direction—similar to what happened in Russia, where stablecoins are now being used by the government and corporations for international payments and foreign trade.”

Youssef emphasized that “the restrictions being introduced will not weaken Hong Kong’s position as a global financial hub,” adding that “Beijing has always needed a free economic sandbox in the form of Hong Kong—and the mainland Chinese economy only benefits from that arrangement.” This suggests a strategic approach where Hong Kong serves as a testing ground for financial innovation while mainland China maintains stricter controls.