China intensifies crypto crackdown targeting stablecoin speculation and biometric data collection

Chinese regulators have escalated their campaign against the proliferation of stablecoin speculation and biometric data collection linked to cryptocurrency initiatives. In late July and early August, authorities ordered financial institutions and research entities to discontinue seminars and halt investigations into stablecoin-related activities. This directive aligns with the country’s stringent anti-crypto stance, which has been firmly in place since the total ban on digital currency in 2021. The People’s Bank of China and the China Securities Regulatory Commission have not publicly commented, but the move reflects a continued refusal to tolerate what officials view as potential vectors for fraud and market instability [1].

The government’s concerns are not limited to stablecoin hype. On August 6, China’s Ministry of State Security issued a public warning against foreign crypto projects using biometric data, particularly iris scans, as incentives for participation. The notice emphasized the dangers to both individual privacy and national security posed by the transfer of such sensitive data abroad [1]. The statement closely resembles concerns raised about the Worldcoin project, which utilizes Orb devices for biometric verification. Though its developer, Tools for Humanity, reportedly paused operations in Indonesia over licensing issues, the project remains prohibited in mainland China [1].

These regulatory actions highlight an expanded focus on national security and the control of digital flows. Shenzhen authorities have already issued warnings to the public about stablecoin investment scams, and the broader crackdown suggests a coordinated effort to prevent the misuse of both financial instruments and personal data. The government’s dual focus on stablecoins and biometric technologies indicates a strategic aim to prevent decentralized finance from undermining existing financial and data governance frameworks [1].

The regulatory landscape has also shown a marked divergence within China’s jurisdictions. While the mainland continues its firm opposition to stablecoins and associated risks, Hong Kong has moved in a contrasting direction by passing its own stablecoin-related legislation earlier this year. This contrast underscores the fragmented regulatory environment across the country and the lack of a unified approach to digital assets [1].

The enforcement actions are expected to reshape the fintech and cybersecurity sectors, with platforms needing to adapt quickly to the tightening compliance environment. While some firms may face short-term challenges, those that can align with regulatory expectations may find opportunities to thrive in the evolving market.

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[1] https://cryptofrontnews.com/china-intensifies-crackdown-on-stablecoin-hype-and-biometric-data-risks/