China Cracks Down on Stablecoin Promotion Amid Fraud Concerns Amid Growing Yuan-Backed Discussions

Chinese regulators are reportedly taking steps to temper the growing enthusiasm around stablecoins, signaling a shift in policy as concerns over fraudulent activities and misleading promotions mount [1]. According to recent reports, financial authorities have instructed companies to cancel seminars and halt all research related to stablecoins [1]. This move comes after local officials warned that the term "stablecoin" is being misused by unauthorized entities to promote dubious investment schemes and illegal fundraising [1].

The crackdown appears to be a response to the rising number of scams and misinformation in the space, with authorities fearing that the hype around stablecoins could be exploited as a new tool for financial misconduct [1]. On July 7, the Shenzhen Municipal Task Force for Preventing and Combating Illegal Financial Activities issued a warning that crypto-related terms, including stablecoins, were being used for malicious purposes [1].

Despite the regulatory caution, there are indications that China remains committed to developing a stablecoin pegged to the yuan [1]. A recent Financial Times report suggests that discussions among officials are gaining traction, particularly as the government seeks ways to reduce the U.S. dollar’s dominance in global markets [1]. Reports indicate that authorities are consulting with experts on how to issue and implement such a stablecoin, signaling a possible softening of the long-standing strict stance on digital assets [1].

Notably, China-based tech firms, including JD.com and Ant Group, are reportedly lobbying the People’s Bank of China (PBOC) to approve the issuance of stablecoins, emphasizing their role in supporting the international use of the yuan [1]. This aligns with broader efforts to develop a central bank digital currency (CBDC), the digital yuan (e-CNY), and the recent announcement by PBOC Governor Pan Gongsheng of plans to establish an international operations center for the currency in Shanghai [1].

While no official confirmation has been provided regarding the timeline for a yuan-backed stablecoin, the growing internal discussions and signs of regulatory flexibility suggest that China's interest in digital assets is evolving [1]. The reported measures to cool market enthusiasm, however, reflect the government's cautious approach to managing the risks associated with stablecoin experimentation.

Source: [1] [Is China backing out of its stablecoin push? Regulators reportedly move to cool market frenzy](https://coinmarketcap.com/community/articles/6895ff4be21b950c870dd350/)