Most recently, the authorities of China have issued a red alert over the misuse of stablecoins and cryptocurrencies by fraud groups to defame the rising popularity of yuan-pegged digital assets in the region.
The public was informed about the deceptive scheme by the Shenzhen Municipal Task Force for Preventing and Combating Illegal Financial Activities.
According to a published by the Government Affairs Disclosure, “ Monitoring has found that some illegal institutions use “financial innovation” and “digital assets” as gimmicks, take advantage of the public’s lack of understanding of stablecoins, etc., and absorb funds by issuing so-called “virtual currencies”, “virtual assets”, “digital assets”, etc., induce the public to participate in trading speculation, disrupt the economic and financial order, breed illegal fundraising, gambling, fraud, pyramid schemes, money laundering, and other illegal and criminal activities, and seriously endanger the property safety of the public.”
The information also notes that some of the companies are portraying themselves as a stablecoin investment platform using hard terminology and higher returns to trap enthusiasts.
Over the past few years, nations worldwide have recognised crypto and other blockchain-based products, but China hasn’t legalized them yet.
Yuan-backed stablecoins are expanding their footprint in the market
Yuan-backed stablecoins are gaining traction as China seeks to counter the dominance of U.S dollar-pegged stablecoins and promote the internationalisation of the yuan. The global stablecoin market is now $247 billion and is overwhelmingly dominated by dollar-backed stablecoins like USDT and USDC, which account for more than 80% of the whole market.
Companies like JD(dot)com and Any Group are lobbying the People’s Bank of China to authorise yuan-based stablecoins, starting with offshore issuance in Hong Kong.
The new stablecoin regime of Hong Kong, effective from August 01, 2025, allows the issuance of stablecoins pegged to the Hong Kong dollar and potentially the yuan.
The CHN Tether pegged to the offshore Chinese yuan is one of the few yuan-backed stablecoins currently in circulation, with a market capitalization of around $4.1 million.
China’s growing interest stems from its growing conflicts with the United States under the current leadership of Donald Trump.
The craze of stablecoins is not limited to China and Hong Kong, but other nations have joined the race in the development and launch of their in-house stablecoin backed by the national currency.
A quick update on the crypto market
According to the data from CoinMarketCap, the crypto market capitalization is $3.35 trillion and the trading volume is below $100 billion, and the crypto fear and greed index is at 52, indicating neutrality.
Bitcoin is currently trading at $108,203, with a market capitalization of $2.16 trillion and a trading volume of $40.21 billion.
The intraday gainer list has been topped by Celestia, followed by Aave, Steller, Story, SPX6900, Sky, and Pol.
