China Issues Fresh Warning on Stablecoin Scams as Hype Peaks

China Issues Fresh Warning on Stablecoin Scams as Hype Peaks
July 7, 2025
~5 min read

Shenzhen authorities have sounded the alarm over a wave of illegal fundraising schemes masquerading as stablecoin investments, underscoring Beijing’s zero-tolerance stance even as the rest of the world accelerates regulation of dollar-pegged digital assets. The city’s task force for combating illicit finance published an advisory on 7 July urging residents to “stay rational” when approached with high-yield pitches linked to so-called “virtual dollars.”

What the new alert says

  • No licence, no legitimacy. The notice stresses that many promoters “do not have permission to raise funds from the public” and are often fronts for online gambling, pyramid sales or money-laundering rings.
  • Personal liability applies. Citizens who knowingly join grey-market pools risk civil penalties and cannot expect the state to reimburse losses—language designed to deter participation at the source.
  • Call to report. Officials asked residents to tip off district regulators or police; whistle-blowers may receive cash rewards once claims are verified.

The warning follows a series of bogus campaigns on WeChat that offered “JD stablecoins” allegedly backed by e-commerce giant JD.com. The company has denied involvement, stating that fraudsters exploited its Hong Kong stablecoin licence application to lend credibility to their pitch.

A nationwide pattern

Shenzhen’s message echoes similar notices issued this week by municipal teams in Beijing, Jiangsu and Sichuan. Local headlines all point to the same playbook: promoters flaunt screenshots of dollar-linked token wallets, promise 2–3 % weekly returns, and claim affiliation with Singapore or Hong Kong entities exempt from China’s 2021 crypto trading ban. Media outlet AInvest cites police sources who say scammers are “piggy-backing on the global buzz around regulated stablecoins to lure retirees and factory workers.”

The Block reports that anti-fraud hotlines in Guangdong province logged a 37 % month-on-month jump in complaints tied to “USD token” schemes during June alone. A Tech in Asia briefing adds that most projects disappear within weeks, leaving fake PDFs of “offshore licences” in their wake.

Why the hype now?

Two macro trends explain the timing. First, a global regulatory race has lent dollar-backed coins new legitimacy. The U.S. Senate’s passage of the bipartisan GENIUS Act on 17 June—America’s first dedicated stablecoin bill—made international headlines. Days earlier, Hong Kong approved a licensing regime for fiat-referenced tokens, positioning the city as a gateway for mainland corporates seeking compliant exposure.

Second, China’s domestic capital controls and negative real returns on bank deposits are pushing yield-hungry savers to riskier online products. Scammers weave these themes together, pitching stablecoins as a “safe, high-interest alternative” to yuan savings while claiming false regulatory blessings.

What China actually allows

Beijing banned crypto-to-fiat trading and mining in 2021 but left room for digital-currency trials under the e-CNY pilot. Stablecoins remain illegal for public distribution on the mainland, yet mainland firms can pursue licences in Hong Kong. Regulators walk a tightrope: they back Hong Kong’s ambition to become a digital-asset hub even as they police retail hype across the border.

Financial-law scholar Liu Dong of Tsinghua University says the latest warnings show “functional regulation” at work. “Authorities are not condemning the technology—they are cracking down on unlawful fundraising,” he told Cointelegraph. “Any suggestion that the mainland is about to legalise private stablecoins is misinformation.”

Comparing China’s stance with global moves

Jurisdiction Status of fiat-backed stablecoins 2025 milestone
China (mainland) Retail issuance banned; cross-border trials limited to e-CNY Shenzhen anti-scam alert (July)
Hong Kong Licensing regime passed May 2025 First applications under review
United States GENIUS Act passed Senate June 2025 House vote expected Q4
European Union MiCA stablecoin rules live June 2024 EBA technical standards phase-in
Japan Revised Payment Services Act effective December 2024 MUFG Proving Bank stablecoin pilot

Regulators worldwide aim to curb the very fraud Shenzhen flags, but the pace of rule-making varies, creating an arbitrage window for criminals who cherry-pick favourable headlines.

What investors should watch

  1. Surveillance upgrades. Shenzhen’s notice hints that local banks and payment firms must tighten transaction monitoring for suspicious on-and-off-ramp activity.
  2. Cross-border data sharing. The alert references reward mechanisms for whistle-blowers, suggesting a growing pipeline between city bureaus and Beijing’s multi-agency anti-fraud database.
  3. Brand hijacking. JD.com’s counterfeit stablecoin is unlikely to be the last. Observers expect copy-cats using other household names—Tencent, Alibaba, or even state banks—especially if Hong Kong grants multiple licences.
  4. Market reaction. Legitimate offshore stablecoin issuers may scramble to issue bilingual disclaimers clarifying that their tokens are unavailable in mainland China, a practice already common for crypto exchanges.

Industry response

Major Asia-Pacific exchanges applauded the directive. A spokesperson for OKX, which operates under a VARA licence in Dubai, told CryptoSlate the notice “reinforces the need for clear jurisdictional boundaries and licensed platforms.” Meanwhile, Hong Kong-based market maker Amber Group said it is “strengthening KYC geofencing” to block mainland IP addresses from any stablecoin liquidity products.

Consumer tips to stay safe

  • Verify licences. Mainland China has issued zero approvals for private stablecoins. Any claim to the contrary is false.
  • Check domain names. Fraudsters often spoof official websites with .cc or .vip endings.
  • Beware of high yields. Promises of weekly returns above 2 % in a pegged-asset product are red flags.
  • Report quickly. Shenzhen’s hotline (0755-12345) offers rewards for actionable leads, reflecting a “whole-society” approach to scam prevention.

Outlook: more crackdowns ahead

Liu predicts the State Administration for Market Regulation will release a nationwide advisory mirroring Shenzhen’s language before year-end. “The playbook is clear: educate the public early, shut down funnel accounts, and prosecute organisers,” he said.

Whether those steps will stifle the underlying demand for stablecoins is another matter. With the yuan locked inside capital controls and the e-CNY still in pilot mode, mainland investors eager for dollar exposure may continue to seek workarounds. For now, the government’s message is unequivocal: stablecoins promoted on Chinese soil are off-limits unless they are government-sanctioned—anything else is likely a scam.

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