In July 2025, the Shenzhen Special Task Force Office for Preventing and Combating Illegal Financial Activities issued a notice warning the public to be vigilant against the risks of illegal fundraising under the guise of "stablecoins" and "digital assets," emphasizing that such actions may involve illegal fundraising, fraud, money laundering, and other criminal activities, posing a threat to economic financial order and public safety. This article will combine relevant announcements from Shenzhen and authoritative information to analyze the risks of stablecoins in illegal fundraising, regulatory measures, and industry background, with the aim of providing the public with rigorous and authentic references.
Warning from the Shenzhen Special Task Force Office
According to the announcement from the Shenzhen Special Task Force Office for Preventing and Combating Illegal Financial Activities, recently some illegal institutions have used concepts like "stablecoins" and "digital assets" as a guise to illegally absorb public funds, suspected of illegal fundraising, fraud, and money laundering. Most of these institutions have not obtained permission from financial regulatory authorities and exhibit high-risk characteristics, such as promising "capital preservation and high returns," using new concepts like "blockchain" and "virtual currency" to package projects, holding promotional meetings, or displaying false "government approvals" to attract investment, ultimately resulting in investors losing all their funds due to a broken funding chain or absconding with the money.
The announcement specifically points out that stablecoins play a central role in these illegal activities. Because their value is usually pegged to fiat currencies or other assets, stablecoins are exploited by criminals to create the illusion of "low risk and high return," inducing public investment. The Shenzhen Special Task Force urges the public to enhance risk awareness, treat investment opportunities involving stablecoins with caution, and encourages reporting related illegal activities to maintain lawful financial order and public safety.
The Risks of Stablecoins in Illegal Financial Activities
Stablecoins, as a type of cryptocurrency designed to maintain stable value, have attracted attention due to their potential applications in cross-border payments and transaction settlements. However, their anonymity, decentralized characteristics, and cross-border liquidity also make them tools for illegal fundraising, money laundering, and other criminal activities. Chainalysis policy advisor Jordan Wain pointed out: "Stablecoins remain the most prevalent type of on-chain crypto crime." Criminals exploit the characteristics of stablecoins to attract investors through false project promotions and promises of high returns, often involving pool operations or Ponzi schemes in actual operations, ultimately causing significant losses to investors.
For example, some illegal fundraising activities use buzzwords like "blockchain" or "technology coins" to claim that investing in stablecoins can achieve "only increases and no decreases" in returns, attracting investors lacking professional knowledge. Such scams typically follow these steps: first, attracting attention through high-profile project packaging; second, creating momentum through promotional meetings or false credentials; third, allowing investors to taste the "sweetness" through initial dividends, inducing larger investments; finally, the funding chain breaks or they abscond directly. These actions not only disrupt financial order but may also trigger social instability.
China's Cryptocurrency Regulatory Background
China's cryptocurrency regulatory history provides important context for current measures. Since 2013, the People's Bank of China and other departments have issued notices prohibiting financial institutions from servicing Bitcoin, clarifying that it does not have legal tender status. In 2017, regulatory authorities further halted initial coin offerings (ICO) and the operation of domestic cryptocurrency exchanges. In 2021, the notice on further preventing and addressing the risks of speculation and trading in virtual currencies explicitly prohibited activities related to virtual currencies, emphasizing their attributes as illegal financial activities. As of 2025, China's regulation of cryptocurrencies has tightened further, completely prohibiting the holding and trading of virtual assets like Bitcoin, reflecting ongoing vigilance against the potential risks of digital assets.
In this context, the stablecoin risk warning from Shenzhen is an important part of the national campaign for preventing illegal financial activities in June 2025, aiming to curb the spread of illegal financial activities through a dual approach of education and law enforcement. The National Financial Supervision Administration also emphasized in the 2025 regulatory work meeting that it will continue to focus on preventing risks, strengthening regulation, and promoting development, firmly maintaining the bottom line of not allowing systemic financial risks to occur.
Global Stablecoin Regulatory Trends and Insights
Globally, stablecoin regulation is becoming a hot topic. In May 2025, Hong Kong passed the Stablecoin Regulation Bill, becoming the first region in the world to establish a special regulatory system for fiat-backed stablecoins (FRS). The bill balances innovation and risk control by clarifying the "payment tool" attribute of stablecoins, implementing a licensing system, and introducing dynamic monitoring of smart contracts. The United States passed the Stablecoin Transparency and Accountability Act in April 2025, requiring issuers to hold highly liquid reserve assets and prohibiting algorithmic stablecoins to reduce systemic risk.
In contrast, mainland China's regulation of cryptocurrencies is stricter, prohibiting the provision of related services to residents of the mainland. However, in practice, there are still issues of evading regulation through means such as identity nesting. The team of lawyer Zeng Zheng from Shanghai Jintiancheng Law Firm suggests that the mainland could learn from Hong Kong's dynamic pricing mechanism, compliance handling pilot programs, and cross-border collaboration experiences, to promote the legal classification of legal attributes and asset disposal procedures involved in cases, thereby constructing a regulatory system that balances innovation and security.
Industry Experts' Recommendations
Industry experts like Coincu emphasize that stablecoin regulation needs to find a balance between preventing illegal use and supporting technological innovation. Strict compliance measures, such as real-name verification, tracing the source of funds, and regular audits, can effectively reduce the risk of illegal fundraising. At the same time, regulatory agencies should collaborate with the industry to establish clear norms and support the legitimate application of blockchain technology to enhance market confidence and investor protection.
In addition, experts call on the public to improve financial literacy and be wary of false advertising claiming "high returns with no risk." Investors should verify whether institutions hold legitimate financial licenses, prudently assess project backgrounds and risk disclosures before participating in any projects involving stablecoins to avoid property losses due to blind investments.
The warning from the Shenzhen Special Task Force Office for Preventing and Combating Illegal Financial Activities reflects China's tough stance on the illegal use of stablecoins and other virtual assets. The abuse of stablecoins in illegal fundraising not only threatens financial order but may also pose challenges to social stability. The public should remain highly vigilant and follow the recommendations below:
Prudent Investment: Avoid trusting promises of "capital preservation and high returns," verify the qualifications of investment institutions, and choose legal and compliant financial products.
Enhance Learning: Improve understanding of blockchain and stablecoins, and be aware of their risks and legitimate uses.
Proactively Report: If you discover suspected illegal fundraising, fraud, or other activities, report them promptly to financial regulatory authorities or law enforcement agencies.
Pay Attention to Policies: Keep a close eye on national and local financial regulatory dynamics, and comply with relevant laws and regulations.
Through the joint efforts of regulatory agencies, industries, and the public, illegal financial activities related to stablecoins can be effectively curbed, maintaining a healthy financial ecosystem. In the future, with the improvement of the global regulatory framework and technological advancements, stablecoins are expected to play a greater role in a compliant environment, supporting the development of the digital economy.
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