Chinese authorities warn of stablecoin fraud amid rising local buzz

China’s regulatory watchdog has sounded the alarm on scams and fraud tied to stablecoins and digital assets, just as public interest starts to pick up.

In a statement on July 7, 2025, the Shenzhen Municipal Task Force for Preventing and Combating Illegal Financial Activities raised concerns about fraudulent groups misusing terms like stablecoins and virtual assets to trick people into risky or illegal investments.

The caution comes as interest in yuan-pegged digital assets gains momentum locally, with authorities warning that some groups are exploiting the trend to run illegal fundraising schemes, promote shady projects, and facilitate money laundering.

According to the notice, these entities often present themselves as financial innovators, issuing so-called “digital assets” or “virtual currencies” to lure in unsuspecting investors. In reality, they are unlicensed operators engaged in illegal activities.

Citing “Regulations on Preventing and Dealing with Illegal Fundraising,” the task force stressed that individuals who fall victim to such schemes are responsible for their own losses. Citizens are urged to strengthen their risk awareness, avoid blindly trusting exaggerated investment promises, and report suspected scams to local authorities.

crypto.news previously reported that momentum is building around offshore yuan-pegged stablecoins, as China-based tech firms including JD.com and Ant Group lobby the People’s Bank of China (PBOC) to authorize the issuance of such tokens.

JD.com reportedly told the central bank that yuan-based stablecoins are urgently needed to support the currency’s international use, especially as dollar-backed tokens like USDT dominate global trade settlements. Industry figures echoed the sentiment, with executives like former Bank of China vice president Wang Yongli and HashKey chairman Xiao Feng emphasizing the risks of inaction.

China has yet to officially comment on the initiative, and the government’s response remains to be seen, particularly given its historical lukewarm regulatory stance.

Meanwhile, other APAC regions like Hong Kong and South Korea have embraced stablecoins as part of a broader digital asset push. Hong Kong is set to introduce a new licensing framework for the digital assets on August 1, while South Korean regulators are pushing for the creation of a legal framework to support Korean won-pegged stablecoins.