Speaking on Monday, Pan said stablecoins expose major gaps in global regulation, making it easier for money laundering, illegal transfers, and terrorist financing to move across borders. His comments followed discussions at the IMF and World Bank Annual Meetings in Washington, where global finance officials voiced similar concerns.
Regulatory Blind Spots
Pan noted that while stablecoins have grown rapidly, they still fall short of basic compliance standards. Many projects, he said, lack proper identity verification and anti–money laundering controls — a shortfall that opens the door to untracked capital flows and criminal transactions.
He emphasized that these worries are now widely shared among central bankers and finance ministers around the world. Despite being pegged to fiat currencies like the U.S. dollar, stablecoins still don’t meet the transparency and oversight levels needed for safe use in the global financial system.
“Speculative activity surrounding stablecoins is adding fragility to the system,” Pan said, pointing out that emerging economies with weaker regulations are especially at risk from financial shocks.
China Doubles Down on Crypto Crackdown
Reaffirming Beijing’s hard line, Pan said China will maintain its sweeping ban on crypto activity. The PBOC, he added, continues to work with law enforcement to curb trading, mining, and speculative activity. These policies, in place since 2017, aim to protect financial stability, consumer safety, and monetary sovereignty.
“The People’s Bank of China will keep working with relevant authorities to clamp down on virtual currency operations and speculation,” Pan said. He stressed that the measures remain effective and that the central bank will continue safeguarding the economy while tracking foreign stablecoin developments.
He added that although stablecoins and other digital assets are becoming more popular, they are still early in development. Most regulators and international organizations, he said, are taking a cautious approach — reflecting the unresolved risks of unregulated crypto markets and the absence of a unified global framework.
Related: Stablecoin market surpasses $300 billion as new USDT rivals emerge.
Balancing Innovation With Sovereignty
Pan’s remarks highlight China’s broader strategy — prioritizing financial security and sovereign control over speculative innovation. For Beijing, stablecoins are not just technology; they’re also about global influence and control.
He warned that the spread of foreign stablecoins could weaken monetary control in developing countries. As these coins circulate locally, they could erode national currencies and complicate monetary policy.
China’s stance aligns with its push for the digital yuan — a state-backed alternative designed to combine digital convenience with government oversight. According to Pan, this model helps shield the country from risks seen in private crypto projects.
Recently, Beijing reportedly told major tech companies to suspend private stablecoin initiatives in Hong Kong — a move meant to reinforce state control over money and prevent market instability.
Meanwhile, global stablecoin adoption keeps accelerating. The U.S. has passed the GENIUS Act, while Japan launched the first yen-pegged stablecoin earlier this year. These innovations, according to reports, have cut remittance costs by up to 95% and boosted crypto transfers by $10 billion.
Still, Pan warned that rapid growth calls for stronger international coordination. Without it, unchecked expansion could increase global financial risks — especially in economies with weak infrastructure.
His remarks underline the balancing act faced by governments worldwide: encouraging digital innovation while keeping firm control over money. For China, that balance clearly leans toward stability and regulation over speculation.