China Regulates Stablecoins as Virtual Currency, Tightening the Domestic Stablecoin Ecosystem and Blocking Cross-Border Arbitrage

A report cited by Caijing Magazine via COINOTAG News on December 2 confirms that the central bank has formally classified stablecoins as virtual currency, extending regulatory reach to cover operational, intermediary, and clearing activities tied to these assets.

This redefinition is framed as a strategic measure to curb currency substitution and to block cross-border arbitrage channels, reinforcing monetary controls and reducing room for circumvention within the sector.

With authorities tightening enforcement against illicit virtual-currency activity, the domestic stablecoin ecosystem faces multidimensional headwinds, prompting developers and service providers to realign strategies as the regulatory landscape tightens.