The Shenzhen government in China has released an official cautionary statement about illegal financial activities, camouflaged as investments in stablecoins and other crypto assets, as public curiosity in stablecoins grows. The warning comes at a time when stablecoins are under intense scrutiny and attention worldwide.
The announcement, made on Monday, revealed that some malicious organizations are exploiting the public’s limited knowledge of stablecoins. They use attractive phrases like “financial innovation” and “digital assets” as bait to draw individuals into investment scams.
“These organizations take advantage of new ideas like stablecoins to promote alleged investment projects involving ‘virtual currencies,’ ‘virtual assets,’ and ‘digital assets,'” stated Shenzhen’s Office of the Special Working Group for Preventing and Combating Illegal Financial Activities in a translated notice.
The authorities also stated that these entities engage in deceptive public advertising to raise funds from the public, leading to unlawful activities such as gambling, fraud, pyramid schemes, and money laundering.
The warning is significant given the recent global interest in stablecoins. Last month, Pan Gongsheng, the governor of China’s central bank, acknowledged that stablecoins and central bank digital currencies are transforming the global payment infrastructure.
In May, Hong Kong’s Legislative Council passed a stablecoin bill, establishing a licensing regime for stablecoin issuers. And last month, the U.S. Senate passed the GENIUS Act, a landmark stablecoin bill, moving it to the House for further consideration.
Christopher Hui, Secretary for Financial Services and the Treasury in Hong Kong, hinted in a Monday interview with the local newspaper Ming Pao that the region might issue stablecoin licenses this year, but the number of licenses granted is expected to remain limited.
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