Virtual Assets Hold No Legal Tender Status

Officials emphasized that none of the existing virtual assets possess the legal attributes of currency and are strictly prohibited from being used as a medium of exchange within the country. According to the PBOC, all activities involving crypto assets fall under the category of illegal financial conduct. Stablecoins were explicitly included in this assessment, described as another form of virtual currency that currently fails to meet essential compliance standards such as customer verification, anti–money laundering measures, and broader financial security requirements.

Regulatory Concerns: KYC, AML and Cross-Border Risks

Chinese regulators highlighted the main risk areas associated with digital assets. Authorities warned that cryptocurrencies continue to be used for:

• Money laundering

• Fraudulent fundraising

• Illicit cross-border capital transfers

These concerns have prompted officials to reiterate that any commercial or financial activity connected to virtual assets remains outside the country’s legal framework.

Rising Speculation and Emerging Challenges

The meeting also noted a renewed increase in speculative trading linked to digital assets, accompanied by sporadic occurrences of illegal or criminal behavior. While the sweeping regulatory measures introduced in 2021 succeeded in bringing the market under tighter control, new market dynamics and evolving threats now require additional layers of supervision. Regulators acknowledged that financial risk management has become more complex and demands continuous monitoring.

China Maintains a Closed Door to Digital Assets

The latest statements clearly indicate that China is not considering any relaxation of its policies toward cryptocurrencies. The central bank maintains that integrating digital assets into the formal financial system is neither feasible nor compatible with national financial security.

These developments reinforce China’s long-standing restrictive approach to the crypto ecosystem, signaling that virtual assets will remain excluded from the country’s regulated financial architecture for the foreseeable future.

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