Stablecoins Increasingly Used in Money Laundering, PBOC Says

Jul 12, 2021 0 comments

image: investopedia.com

PBOC governor Fan Yifei says stablecoins are increasingly being used as a tool for illegal activities and money laundering.

The PBOC (People’s Bank of China) is warning that stablecoins are increasingly being used as a tool for illegal activities and money laundering, presenting serious risks to global financial systems.

Stablecoins are attractive to investors because their value is pegged to reserve assets like the US dollar or gold, which makes them less volatile than cryptocurrencies such as bitcoin. The total market cap of the two largest stablecoins, Tether and USDC, has grown to over USD 100 billion as of the end of May.

Speaking at a press briefing on Thursday (7 July), PBOC governor Fan Yifei said stablecoins have become speculative tools that threaten financial security and social stability, and that they are increasingly being used to launder illicit proceeds of crime.

Fan said the Chinese government has already taken action to limit the expansion of global stablecoins in the country.

In October, the PBOC’s local branch in southern city Huizhou arrested 77 individuals suspected of using Tether in cross-border transactions to launder gambling proceeds worth nearly CNY 120 million.

Fan said China’s official CBDC will not have the same problem, due to a mechanism which requires users of the digital yuan to apply to join “white lists” at state-owned banks. Currently, there are 10 million users on such lists, he said.

Sourced from regulationasia.com.

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