The Shenzhen municipal authorities have issued a warning urging general investors to be cautious about stablecoins. This is due to concerns about the increasing illegal investment scams that have emerged with the recent surge in interest in digital assets.
This warning comes as the Chinese government is promoting the introduction of a yuan-based stablecoin. However, the authorities emphasized the need to be wary of criminal methods that exploit the public's lack of understanding of digital assets, warning against fraud schemes that lure people with slogans like 'financial autonomy' or 'realizing digital wealth'.
According to the Shenzhen Special Task Force for Preventing Illegal Financial Activities, some forces are promoting investment products featuring 'virtual currencies' and 'digital assets' under the guise of new technologies like stablecoins. They warned that while these products are marketed with low volatility and stability, they often lead to illegal fundraising, gambling, fraud, multi-level marketing, and money laundering.
China has already completely banned virtual asset trading and mining. Despite this, illegal activities continue to flourish, highlighting the need for stricter regulation and investor education. Meanwhile, amid this confusion, the Chinese government continues to pursue stablecoin projects based on central bank digital currency (CBDC).
At the recent Binance Blockchain Week, Circle's CEO Jeremy Allaire expressed an optimistic outlook, stating that stablecoins are experiencing rapid global acceptance faster than central bank digital currencies.
The growth of stablecoins is also notable in the global market. According to defillama, approximately $50 billion has been injected this year, bringing the total stablecoin market capitalization to $255.6 billion. Among these, USDT leads with $159.4 billion, followed by Circle's USDC with $61.9 billion.
Circle recently listed on the New York Stock Exchange with the ticker 'CRCL', recording a market capitalization of $45.7 billion and enhancing corporate credibility.
The regulatory environment for stablecoins is also being organized. The US Senate recently passed the 'GENIUS Act' with an overwhelming 68-30 vote, which is expected to encourage more institutional and corporate participation in stablecoins. In fact, major retail companies like Amazon and Walmart are exploring their own stablecoins, and large US banks are reviewing joint projects.
As the potential of stablecoins grows, the simultaneous strengthening of warnings to protect investors is significant for the industry. At this point, thorough information review is more necessary than ever, instead of excessive expectations.
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