Shenzhen Warns of Stablecoin Scams Amid China's Crypto Crackdown

Shenzhen officials have issued a public alert warning residents to be cautious of scams involving stablecoins. The city's illegal financial activities task force highlighted an increase in illegal fundraising and fraud linked to cryptocurrencies, noting that some institutions exploit the public's lack of understanding of stablecoins to engage in illegal activities such as gambling, fraud, pyramid schemes, and money laundering. The task force encouraged the public to report any suspicious activities to authorities, with rewards available for tips.

Despite official bans limiting access to crypto, trading remains widespread in China, making it a significant vector for scams targeting both mainland citizens and victims abroad. Chinese organized crime groups also run scamming syndicates across Southeast Asia. The Shenzhen alert follows a warning from Chinese e-commerce giant JD.com on June 30, which cautioned users about fake promotions of a "JD stablecoin." JD.com clarified that no official coins have been released and that any claims to the contrary are fraudulent.

In contrast, neighboring Hong Kong is preparing to implement a new regulatory framework for stablecoins in August. Only licensed firms will be allowed to issue or market fiat-referenced tokens to users. Financial Secretary Paul Chan reaffirmed Hong Kong’s support for the sector, linking stablecoin development to Asia’s growing interest in settling trade in local currencies instead of U.S. dollars. Chan noted that stablecoins provide a cost-effective alternative to the traditional finance system and could reshape cross-border payments and capital markets.

Sean Lee, co-founder of a digital asset tech company, described Hong Kong’s regulation as “very progressive in comparison to other jurisdictions.” He highlighted that the framework allows for multi-currency issuance and the acceptance of using public networks, although it sets a high bar for market entry. The focus in Hong Kong is more on business-to-business usage than on retail applications, a trend echoed in JD.com’s stablecoin plans and those of other companies and banks exploring the technology. This shift is partly due to public unfamiliarity with stablecoins and the advanced state of domestic digital payment systems in the region.