Financial stability and currency sovereignty risks loom large
The Bank for International Settlements (BIS) points out that stablecoins as a reliable form of currency have deficiencies, and without effective regulation, they may pose threats to financial stability and currency sovereignty. From the perspective of the global landscape of stablecoins, currently, 97% of global stablecoins are pegged to the U.S. dollar. This highly concentrated pegging model, if developed on a large scale within China, is likely to exert pressure on the process of RMB internationalization. For the RMB to move towards internationalization, a stable domestic financial environment and an effective monetary policy transmission mechanism are required. If stablecoins develop in a disorderly manner and a large amount of funds flow into the stablecoin sector, it will interfere with the regulation of the domestic money supply, making it more difficult for the central bank to control the total money supply and, in turn, weaken the effectiveness of monetary policy.
Taking the experience of some countries as an example, some emerging economies have experienced shocks to the circulation of their national currencies due to the rapid penetration of stablecoins. Central banks have been unable to achieve expected results in implementing monetary policy measures such as interest rate adjustments, leading to economic instability. The cross-border flow characteristics of stablecoins cannot be ignored, as they can conveniently bypass foreign exchange controls, posing a significant challenge to China's foreign exchange management order. In recent years, some foreign trade enterprises have attempted to use stablecoins like USDT for transactions to evade regulation, causing trade issues such as export tax rebate obstacles, and triggering a series of criminal cases that severely impact financial stability.

The challenges of anti-money laundering and other controls are severe
The anonymity and ease of cross-border use of stablecoins have become a significant obstacle in anti-money laundering and other regulatory efforts. In the traditional financial system, anti-money laundering regulation has a relatively complete mechanism, allowing banks and other financial institutions to monitor the flow of funds and detect suspicious transactions in a timely manner through customer identity verification and transaction record tracking. However, the emergence of stablecoins has disrupted this relatively orderly regulatory situation. Their anonymity makes it difficult to trace the true sources and destinations of funds, allowing criminal groups to easily mix illegal gains into legitimate transactions for 'cleaning' operations.
From actual cases:
The “DGCX Xinkangjia platform” uses USDT to settle and transfer funds amounting to 12.9 billion yuan, a staggering harvest of 20 billion! The full revelation of the “Ponzi scheme” between Xinkangjia and the Blue Trading Platform.
The abbot of the Shaolin Temple is using stablecoins for money laundering: The digital currency maze of Shi Yongxin - the fall from the Shaolin abbot to a money laundering giant in the cryptocurrency world.
Such a large-scale transfer of illegal funds is difficult for regulatory authorities to detect early, highlighting the challenges of anti-money laundering regulation concerning stablecoins. Besides money laundering, illegal fundraising, telecom fraud, and other criminal activities have also begun to use stablecoins for fund transfers. These illegal activities leverage the characteristics of stablecoins to quickly transfer funds abroad, creating significant difficulties for victims in recovering their funds and for law enforcement in solving cases. Some criminals post fake investment projects online, attracting investors to invest in stablecoins, only to quickly abscond with the funds. Due to the anonymity and cross-border nature of stablecoin transactions, victims often lose everything, while law enforcement faces challenges such as difficulty in cross-border investigation and evidence collection, and tracking the flow of funds.
The positioning is vague and needs clarification
The Hong Kong Monetary Authority and other regulatory agencies emphasize that stablecoins are essentially payment tools utilizing blockchain technology, not investment or speculative tools. It is necessary to avoid over-conceptualization and to view their role objectively and calmly. However, in actual markets, stablecoins are often overhyped, deviating from their essential positioning as payment tools. Many investors view stablecoins as high-yield investment products, blindly following trends and ignoring the associated risks. Some institutions also tend to exaggerate the technological potential of stablecoins while downplaying risks in their research and promotion, misleading investors.
Some research reports overly emphasize the convenience of stablecoins in cross-border payments while neglecting to mention or briefly addressing the financial risks they may pose. This leads investors to recklessly enter the stablecoin investment field without comprehensive information.
In high-level domestic discussions, it has also been pointed out that the essence and service areas of stablecoins need to be clarified to avoid confusion with the core demand for the internationalization of the RMB. The internationalization of the RMB is a complex and systematic project that requires measures to enhance the international status of the RMB, strengthen financial market openness, and improve financial infrastructure. Although stablecoins have some innovations in cross-border payments, they cannot be equated with the core demand for RMB internationalization. Mixing the development of stablecoins with RMB internationalization not only misleads policy direction but also may lead to misunderstandings in the market regarding the process of RMB internationalization, disrupting the normal financial market order.
In addition, China needs to carefully layout its strategy in the global digital financial regulatory competition. The U.S. has consolidated the status of the dollar in the global digital financial field by anchoring stablecoins to the dollar or U.S. Treasury bonds through the (GENIUS Act); Hong Kong has implemented (stablecoin regulations) to explore stablecoin regulation while providing a testing ground for the development of offshore RMB stablecoins.
If the stablecoin market is overly opened within China, it may trigger capital outflows domestically, impacting financial market stability; on the other hand, it may also lead to a passive position in the formulation of global digital financial rules, being 'led by the nose' by U.S.-dominated stablecoin regulations. Therefore, through cooling measures, China can prevent risks while calmly observing the global development trend of stablecoins and actively explore digital financial development paths that align with its own interests, maintaining strategic initiative in the global digital financial competition.