China Cracks Down on Stablecoin Promotion Amid Global Regulatory Divergence

Chinese financial regulators have intensified scrutiny of stablecoins, issuing directives to domestic brokerages and research institutions to cease promotional activities related to the assets. This move, occurring in late July and early August, reflects growing concerns over the potential misuse of stablecoins for speculative trading and fraudulent schemes [1]. Beijing has also urged the cancellation of seminars and the removal of related research publications, signaling a broader campaign to curb unregulated crypto activity. While officials acknowledge the utility of stablecoins in cross-border transactions, they remain wary of their domestic proliferation, particularly in the absence of clear oversight frameworks. Earlier this summer, local authorities in Shenzhen highlighted a surge in scams masquerading as stablecoin investment opportunities, further amplifying regulatory caution [1].

Despite China’s sweeping ban on most crypto operations, over-the-counter trading persists through informal channels. Analytics firm Chainalysis estimates that such activity amounted to approximately $75 billion in the first three quarters of 2024, underscoring the resilience of digital asset markets [1]. The continued presence of speculative behavior has reinforced Beijing’s push for tighter controls, even as the People’s Bank of China advances its own digital currency agenda. A newly established international operations center for the digital yuan (e-CNY) in Shanghai highlights China’s ambitions to expand its state-backed digital currency into global financial hubs.

In contrast, the United States has adopted a more structured approach to stablecoin governance. In July, President Donald Trump signed the GENIUS Act, marking the first federal legislation specifically addressing stablecoin operations [3]. The law introduces a centralized regulatory framework that mandates licensing requirements, enhances transparency, and reinforces know-your-customer (KYC) protocols. This approach aims to balance innovation with consumer protection, offering a contrast to China’s more restrictive posture.

Meanwhile, China Hong Kong has implemented its own stablecoin regulations through the Stablecoin Ordinance, which came into effect on August 1, 2025. The law enforces mandatory licensing and stringent KYC requirements for stablecoin issuers [2]. While these measures aim to ensure compliance and reduce illicit activity, critics argue that the strict identity verification rules may hinder the adoption of stablecoins in the region. The potential tension between regulatory rigor and technological adoption remains a key debate among market participants.

The contrasting regulatory responses in China and the U.S. reflect diverging global perspectives on stablecoins. China’s restrictive approach is part of a broader strategy to reinforce financial stability and control risks associated with unregulated digital assets, while the U.S. seeks to formalize a regulatory structure that supports innovation and institutional adoption. These developments highlight the increasing role of stablecoins in the global financial system and the urgent need for coherent governance strategies.

As regulatory frameworks continue to evolve, market actors must navigate a complex and shifting landscape. The actions taken by China and the U.S. not only shape local markets but also influence global stablecoin dynamics. The U.S. legislation may serve as a model for other nations, while China’s tightening controls could further isolate its digital asset sector.

Source:

[1] Stablecoins Under Fire In China, While US Enacts A Federal Stablecoin Law (https://www.benzinga.com/crypto/cryptocurrency/25/08/46995987/stablecoins-under-fire-in-china-while-us-enacts-a-federal-stablecoin-law)

[2] Hong Kong Enacts Strict Stablecoin Law With Mandatory Licensing and KYC Rules (https://cryptodnes.bg/en/news/regulations/)

[3] US bank stocks rise on deregulation hopes, while crypto stocks surge after stablecoin legislation passes (https://www.juliusbaer.com/en/insights/podcasts/)