Authorities in Shenzhen have issued a warning to residents about fraudulent financial schemes posing as stablecoin investments, as rising interest in stablecoins attracts unscrupulous actors.
In a notice released Monday, Shenzhen’s Office of the Special Working Group for Preventing and Combating Illegal Financial Activities said some entities are leveraging buzzwords like “financial innovation” and “digital assets” to promote scams disguised as legitimate opportunities.
The advisory comes as stablecoins gain global attention. Pan Gongsheng, governor of China’s central bank, recently acknowledged that stablecoins and central bank digital currencies are transforming international payment systems.
Authorities cautioned that stablecoin schemes often involve illegal activities like fraudulent fundraising, gambling, pyramid schemes, and money laundering.
Hong Kong’s Financial Secretary Christopher Hui added Monday that the city could begin issuing stablecoin licenses later this year, but suggested approvals would be limited.
On the international stage, the U.S. Senate advanced the GENIUS Act last month, a landmark stablecoin bill now awaiting House deliberation.
Meanwhile, Hong Kong has taken steps to regulate the sector, with its Legislative Council passing a stablecoin bill in May to establish a licensing framework for issuers.
Recent reports that Amazon, Walmart, and other major companies are exploring stablecoin payments sent ripples through traditional finance, briefly pushing stablecoin transaction volumes ahead of Visa’s in 2024. Frank Combay of Next Generation said regulatory clarity, especially Europe’s MiCA framework, has unlocked stablecoins’ growth potential by removing the biggest barrier: uncertainty.
Stablecoins have emerged as one of crypto’s rare success stories, capturing the attention of corporations and regulators alike.
