By Martin
Zhao Binghao, Dean of the Institute of Financial Technology and Law at China University of Political Science and Law, pointed out that the central bank's explicit classification of stablecoins as virtual currency does not equate to designating stablecoins as "contraband" under criminal law.
Recently, the People's Bank of China held a coordination mechanism meeting on combating virtual currency trading and speculation, explicitly stating for the first time that stablecoins are a form of virtual currency. The meeting noted that stablecoins cannot effectively meet requirements such as customer identification and anti-money laundering, posing risks of being used for illegal activities including money laundering, fundraising fraud, and illegal cross-border fund transfers.
Zhao Binghao, Dean of the Institute of Financial Technology and Law at China University of Political Science and Law, interpreted this, stating that the central bank's definition does not classify stablecoins themselves as "contraband" under criminal law. Instead, it brings business, intermediary, and clearing activities related to stablecoins within the scope of regulation.
The central bank's characterization of stablecoins this time continues China's consistent strict regulatory policy towards virtual currency. The meeting reiterated that virtual currency does not possess the same legal status as fiat currency, is not legal tender, and should not and cannot be circulated and used as currency in the market.
Dean Zhao Binghao clarified the legal boundaries of this regulatory stance: the core lies in regulating various business activities surrounding stablecoins, rather than prohibiting stablecoins themselves. Stablecoins can achieve dollar-like instant clearing on-chain, bypassing the traditional banking system and foreign exchange controls. If used on a large scale, they could weaken the status of the local currency for pricing and settlement.
Against the backdrop of tightening domestic regulation, stablecoin-related technologies and liquidity will increasingly migrate to offshore and regional financial centers. For domestic institutions deploying stablecoins overseas, their "room for imagination will be infinitely reduced," becoming more confined to practical application scenarios such as cross-border payments and supply chain finance.
With the central bank's explicit inclusion of stablecoins within the virtual currency regulatory framework this time, it has become an industry consensus that the development space for stablecoins within China will continue to shrink.
