PBOC Intensifies Crypto Restrictions to Safeguard the Yuan’s Dominance in Digital Currency

China Reinforces Crypto Ban and Highlights Stablecoin Risks

China’s central bank has reiterated its strict prohibition on cryptocurrencies and expressed heightened concern over the risks posed by stablecoins. This stance was emphasized during a recent meeting involving several government agencies, reflecting the country’s ongoing commitment to rigorous oversight in the digital asset sector, which continues to face pressure from international regulatory actions.

On Wednesday, the People’s Bank of China (PBOC) set the USD/CNY reference rate at 7.0796, making a slight adjustment that demonstrates its active management of currency stability amid broader economic headwinds. This move coincides with Beijing’s intensified campaign to reduce dependence on foreign technology. Notably, regulators have recently prohibited ByteDance, the parent company of TikTok, from utilizing Nvidia chips in new data centers, as reported by Reuters.

The PBOC’s latest remarks, though not introducing new policies, reaffirm its opposition to unregulated digital currencies. This approach is part of a wider effort to safeguard financial stability and limit speculative activities. The central bank’s attention to stablecoins stems from worries that these assets could interfere with monetary policy and challenge the government’s control over the yuan. Following a high-level meeting, officials stressed the importance of “enhancing oversight of digital currencies and mitigating systemic risks,” according to Bloomberg. Such statements have unsettled global investors, especially as China accelerates its drive for self-reliance in semiconductor and artificial intelligence infrastructure.

Impact on Technology and AI Sectors

Regulatory measures are already reshaping China’s technology landscape. ByteDance, which was set to acquire more Nvidia chips than any other Chinese company in 2025, now faces significant obstacles in expanding its AI-powered operations, according to Reuters. An Nvidia representative stated that current regulations prevent the company from offering competitive data center GPUs in China, dealing a setback to its ambitions in the world’s second-largest economy. In response, Chinese firms are ramping up the adoption of domestically produced chips, though this transition is challenged by both technical and financial hurdles.

Broader Economic Context

The central bank’s actions intersect with wider economic issues, including the ongoing crisis in China’s property sector. For example, Vanke’s unprecedented request to extend repayment on a 2 billion yuan bond has put additional strain on government resources and shifted focus away from technology policy. Nevertheless, the PBOC’s dual emphasis on cryptocurrencies and stablecoins points to a long-term plan to strengthen control over digital finance. This includes tightening restrictions on cross-border transactions and ensuring that new technologies align with national security priorities.

Balancing Regulation and Innovation

Industry experts caution that excessive regulation could hinder technological innovation unless authorities also provide incentives for domestic development. “China faces the challenge of building a robust AI ecosystem while maintaining strict regulatory boundaries,” noted one analyst, who preferred to remain anonymous. The government’s commitment to fostering homegrown solutions is evident in projects like Astra Bitcoin, a Real World Asset (RWA) initiative backed by gold and real estate, which seeks to connect traditional finance with decentralized platforms. However, such ventures remain relatively small compared to the scale of state-led efforts in semiconductors and AI.

Future Outlook for Digital Assets

Looking forward, the PBOC’s focus on the dangers of stablecoins could lead to tighter regulations for platforms such as Truther, which recently introduced a non-custodial USDT Visa card in El Salvador. Although the central bank has not yet directly targeted stablecoins, its recent warnings suggest that stricter oversight of digital assets competing with the yuan may be on the horizon. This mirrors global developments, as both the United States and the European Union grapple with the challenges posed by decentralized finance.

As China’s regulatory framework continues to evolve, the relationship between monetary policy, technological independence, and financial security will play a decisive role in shaping the country’s digital economy. For now, the PBOC’s renewed commitment to its crypto ban and vigilance regarding stablecoins sends a clear signal: innovation in digital finance will advance only under close state supervision.