- China’s government highlights growing use of stablecoins in fraudulent fundraising and illegal financial activities.
- Regulators stress need for public vigilance and stronger enforcement as crypto hype continues in Asia.
What happened: Chinese police target crypto scams using stablecoins
China’s Ministry of Public Security has issued a strong warning to the public against rising scams involving stablecoins, digital assets typically pegged to fiat currencies like the US dollar. According to Cointelegraph, officials highlighted a surge in cases where scammers use stablecoins to disguise illegal fundraising, often promising high returns through fake investment platforms.
The statement specifically warned that “offenders are making use of people’s lack of financial knowledge and the speculative nature of digital currencies to carry out pyramid schemes and fraud.” The Ministry urged citizens to avoid participating in any investment opportunities related to virtual currencies that are not legally authorised in China.
Authorities pointed to recent incidents involving Tether (USDT), which is frequently used in underground financial transactions. In one case, police dismantled a criminal group that had raised millions through stablecoin-based platforms under the guise of blockchain innovation.
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Why this is important
China has maintained a hard stance on cryptocurrency trading since 2021, banning all related commercial activities. Yet, despite restrictions, the crypto sector continues to evolve globally, especially in neighbouring countries like Hong Kong, which is pushing ahead with its own digital asset regulations. This has created grey areas where domestic users are still exposed to crypto-related risks.
The public warning comes at a time when global stablecoin circulation is once again rising, with over $160 billion in supply according to CoinGecko. Criminal actors are exploiting this growth to mask illicit activities under technical terms such as “web3”, “metaverse”, and “blockchain innovation”.
The Chinese government’s caution highlights the disconnect between consumer enthusiasm for crypto and regulatory oversight. It also underscores the difficulties in policing decentralised platforms, which often operate across borders. As China continues to develop its digital yuan, the clash between private digital assets and state-controlled initiatives is likely to intensify.
