Stablecoins under scrutiny in China, warns against illegal fundraising

China issued a warning against illegal fundraising risks tied to stablecoins, emphasizing the importance of compliance and safety in digital financial practices. The Beijing Internet Finance Association highlighted the dangers of fundraising schemes involving stablecoins and digital currencies, saying that investors in these schemes have no legal recourse. The notice cautions against high-return promises tied to "financial innovation" and "blockchain technology" narratives. The association also cautioned against unauthorized schemes exploiting buzzwords such as “stablecoins,” “decentralized finance (DeFi),” and “Web 3.0,” which often lure investors with promises of high returns but no legal recourse in case of fraud. "These activities can easily evolve into crimes such as illegal fundraising, financial fraud, pyramid schemes and money laundering, which would severely disrupt economic and financial order, and endanger public interest and social trust," the association said. Stablecoins are digital tokens pegged to assets like the U.S. dollar ( DXY ) and are gaining popularity for their potential to disrupt traditional payment structures. Globally, nations like Hong Kong and the U.S. are racing to establish regulatory frameworks for stablecoins, aiming to expand their influence in the digital finance landscape. While mainland China maintains strict prohibitions, Hong Kong is set to implement stablecoin legislation from August 1, 2025, as part of its strategy to become a digital asset hub. The collateralized fiat stablecoin with the largest market cap is Tether ( USDT-USD ), which is pegged to the U.S. dollar. A collateralized crypto stablecoin is Dai ( DAI-USD ). Another collateralized commodity stablecoin is Paxos Gold ( PAXG-USD ). More on China MSCI: Revenue Visibility Like No Other REMX: See If It's Smart To Invest In Rare Earths Now MP Materials Corp. (MP) Presents at J.P. Morgan 2025 Energy, Power, Renewables & Mining Conference Transcript Asia stocks mixed as Trump tariff uncertainty lingers; China inflation data also weighs China CPI sees slight rise up 0.1%, PPI drops most in two years amid weak demand and tariff risks