- China quietly warns brokerages to stop pushing stablecoin promotions now.
- Regulators target rising illicit use as underground crypto market thrives.
- Mainland crackdown contrasts sharply with Hong Kong’s expanding crypto hub.
According to Bloomberg Chinese regulators have quietly instructed local brokerages and financial institutions to stop promoting stablecoins. Several major firms were told to cancel planned events and remove research reports on the asset class.
Authorities are particularly concerned about stablecoins because they can be used to conduct illegal transactions in mainland China. The China Securities Regulatory Commission or the central bank has not publicly announced this.
In addition to the threat of illegal activity, the officials are also trying to regulate market overenthusiasm. Christopher Wong, a currency strategist based in Singapore, told Bloomberg that they do not want to encourage a herd mentality among novice investors.
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OTC Crypto Trading Persists Despite Ban
Over-the-counter digital asset trading remains active in China despite a nationwide ban on cryptocurrency transactions. Chainalysis estimates that underground crypto trades totaled around $75 billion in the first nine months of 2024.
Stablecoins are a standard tool for such trades, and global supply is projected to reach $3.7 trillion by 2030. To this end, certain provincial officials have released new warnings about illegal fundraising using virtual currencies.
The directive to brokerages was reportedly given privately to prevent a public controversy. Companies that had been planning to launch promotional events for stablecoins have withdrawn their plans.
Mainland Clampdown vs Hong Kong’s Openness
While mainland regulators move to dampen stablecoin hype, Hong Kong is expanding its regulated crypto market. Other firms that have already acquired licenses in the city include CMB International Securities and Guotai Junan Securities, which are government-backed.
Hong Kong has a system where one can participate with a limited role under tight control, which enables controlled development. On the contrary, the mainland is still in the process of restricting stablecoin activity and limiting its effects on investors.
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