https://www.roic.ai/news/china-bans-unapproved-yuan-linked-stablecoin-issuance-overseas-tightening-crypto-crackdown-02-06-2026
China's financial regulators have taken a decisive step to curb the proliferation of yuan-linked stablecoins issued abroad, with the People's Bank of China (PBOC) leading a joint effort to issue the "Notice on Further Preventing and Addressing Risks Related to Virtual Currencies" (Yinfa [2026] No. 42) on February 6, 2026. According to people familiar with the matter, the notice declares virtual currencies lack legal tender status and deems related activities illegal financial operations, effectively banning domestic entities from issuing such currencies overseas without prior regulatory approval. This action repeals 2021 regulations and mandates immediate crackdowns on violations, including prohibitions on all virtual currency trading and real-world asset (RWA) tokenization within mainland China.
Efforts to restructure China's approach to digital assets have hit a snag with this sweeping ban, which aligns with the nation's long-standing cryptocurrency crackdown since 2017. A PBOC meeting in November 2025 had already emphasized curbing speculation and highlighted stablecoins' "chaos" and non-compliance with KYC/AML standards. Without a deal for regulatory approval, companies would be forced into compliance or face severe penalties, as the notice bars financial institutions from supporting virtual currency activities. This move counters thriving international stablecoin markets, which offer efficient cross-border payments but threaten local currency control, according to sources close to the regulators.
The ban reinforces China's strict controls amid global stablecoin growth, with monthly transaction volumes reaching $10 trillion by January 2026, to protect monetary sovereignty and prevent risks like money laundering or erosion of central bank policy effectiveness. It promotes the e-CNY as a state-controlled alternative integrated into the financial system, with commercial banks set to pay interest on e-CNY wallets starting January 2026. This development follows slowed e-CNY uptake domestically despite pilots, contrasted with U.S. support for private stablecoins under President Trump, who banned CBDCs in January 2026. In response to inquiries, a spokesperson for the PBOC declined to comment further, but industry insiders note that the policy prioritizes the e-CNY over decentralized stablecoins to maintain financial stability and state oversight.
Stakeholders like domestic firms and internet platforms now face prohibitions on participation or promotion, with heightened monitoring and penalties for crimes, potentially stifling blockchain innovation outside state channels. The focus shifts benefits of blockchain to e-CNY for safer adoption, as courts handle rising crypto-related cases. Short-term, immediate enforcement disrupts unapproved overseas issuance, boosting e-CNY pilots like interest-bearing wallets and Shanghai's cross-border platform. Long-term, deeper e-CNY integration for trade settlements and competition with stablecoins via deposit-like returns is expected, per 2026 priorities under the fifteenth five-year plan, while sustaining crypto bans. Experts predict sustained preference for CBDC over private stablecoins to mitigate systemic risks, with Hong Kong having suspended stablecoin issuer licenses post-2025 rules, aligning with mainland policy.
