PBoC issues fresh warning, labels stablecoins a high-risk threat

China’s central bank reaffirmed that all crypto-related activities remain illegal in the country, warning that stablecoins pose significant risks tied to illicit payments, money laundering and financial instability. Officials reiterated that the state will not tolerate speculative trading or cross-border crypto flows, calling for strict enforcement across financial institutions.

The announcement marks China’s strongest communication on crypto in recent months, signalling a renewed push to eliminate private digital-asset use as the government prioritises control over capital movement and financial discipline.

Crypto markets slump as Hong Kong-linked firms feel the impact

The latest crackdown reverberated through global markets, with leading cryptocurrencies slipping in early trading following Beijing’s remarks. Some Hong Kong-listed firms associated with digital-asset and stablecoin ventures also declined sharply, reflecting investor anxiety over spillover effects from the mainland’s policy tightening.

Market analysts noted that China’s stance continues to influence broader Asian sentiment, particularly in sectors tied indirectly to crypto infrastructure and financial services.

Bitcoin mining resurfaces as underground activity expands

Despite the nationwide ban, China has re-emerged as a major contributor to global Bitcoin mining. Recent industry data suggests that miners have quietly resumed operations in regions with surplus electricity, helping the country regain a notable share of global hashrate.

The resurgence indicates that profit incentives remain strong, and enforcement against decentralised mining activity continues to vary across provinces. Demand for mining hardware in the domestic black market has also been rising, underscoring a disconnect between regulatory intentions and on-ground activity.

Authorities vow coordinated enforcement across agencies

Multiple government bodies — including the central bank, public security agencies, cyberspace regulators and judicial authorities — held a joint meeting last week to strengthen cross-agency coordination. The meeting emphasised strict monitoring, tighter anti-money-laundering controls and immediate action against any platform or individual involved in crypto-related transactions.

Officials stressed that private cryptocurrencies undermine financial stability, and reiterated support for the state-backed digital yuan as the only legitimate form of digital currency in China.

China’s latest actions reinforce its hardline position on private digital assets, even as underground activity proves resilient. The renewed crackdown has shaken sentiment across regional markets once again, signalling that the regulatory environment in the world’s second-largest economy remains firmly opposed to decentralised crypto activities.

China’s Bitcoin mining share climbs again

China has re-emerged as a major force in global Bitcoin mining, regaining an estimated 14% share of total hashrate as of late November. Despite the nationwide ban on mining imposed in 2021, operations have quietly resurfaced in provinces with abundant cheap electricity and unused industrial infrastructure. The renewed activity suggests that miners continue to find ways to operate discreetly while benefiting from favourable local conditions.

Mining rig demand surges across the domestic market

Domestic mining hardware manufacturers have reported a sharp rise in sales over the past month, signalling growing interest among Chinese buyers. The demand reflects both existing miners expanding their facilities and new entrants exploring opportunities in covert mining setups. The increased hardware purchases closely align with the rise in China’s underground mining footprint.

Stablecoin downgrade triggers unease among Chinese traders

A significant downgrade of a widely used stablecoin created noticeable concern among crypto traders in China, particularly within informal trading networks. With many underground users depending on stablecoins for liquidity, transfers and offshore exchange access, the downgrade led to increased caution and discussions about market stability. The development highlights the sensitivity of China’s shadow crypto economy to global stablecoin movements.

Ban remains in place, but enforcement appears inconsistent

While China’s official stance on cryptocurrency mining and trading remains unchanged, recent developments point to uneven enforcement across regions. Provinces with surplus energy and strong industrial bases appear more tolerant of low-visibility mining activity. This lack of uniform enforcement has created pockets where mining can flourish despite national restrictions.

Underground crypto activity continues to expand

The past 24–48 hours underscore that China’s crypto presence is far from dormant. Rising hashrate, increased hardware demand and volatile trader sentiment all point to a crypto ecosystem operating beneath the regulatory surface. Even as the government advances its digital yuan initiative, underground crypto markets remain active, adaptive and resilient.

Disclaimer: This article is for general information only and does not constitute financial advice.