In July 2025, during the China Finance 40 Forum seminar, former PBoC Governor Zhou Xiaochuan warned about potential risks related to stablecoins.
Zhou Xiaochuan's Warnings About Stablecoin Risks
Zhou Xiaochuan indicated that stablecoins could escalate asset speculation and systemic risks. "We need to be vigilant against the risk of stablecoins being excessively used for asset speculation, as misdirection could trigger fraud and instability in the financial system," he emphasized.
Regulatory Environment and Financial Stability
The regulatory climate in China remains cautious regarding stablecoins, deterring immediate liberalization. Zhou's comments underline skepticism towards unrestricted stablecoin growth, highlighting the need for a balance between innovation and financial stability.
Impact on the Stablecoin Market in China
Current stablecoins like USDT and USDC continue to dominate the market without immediate disruption from Zhou's statements. These stablecoins account for over 99% of global market share, underscoring their significance for cross-border settlements amid regulatory scrutiny.
Zhou Xiaochuan's warnings serve as a crucial signal for financial analysts and policymakers closely monitoring the developments in the stablecoin sector.
