China’s central bank emphasizes crypto regulation in annual financial stability report

The People's Bank of China, the central bank, highlighted cryptocurrency regulation in its latest annual financial stability report, noting that Hong Kong is “actively exploring” crypto licensing. This comes while the mainland continues to enforce its ban on cryptocurrency trading.

In the 2024 Financial Stability report released on Friday, the PBOC pointed out that 51 jurisdictions globally have issued bans or restrictions on cryptocurrency assets, with some economies adjusting existing laws or enacting new legislation to regulate them.

In September 2021, the central bank and several other central authorities issued a notice banning all crypto trading and mining activities on the mainland. Hong Kong, however, has opened its doors to crypto firms. In June 2023, it officially launched a crypto licensing regime for crypto trading platforms, allowing licensed exchanges to offer retail trading services.

The PBOC noted in the financial stability report that Hong Kong also requires major financial institutions, such as HSBC and Standard Chartered Bank, to include cryptocurrency transactions in their routine customer supervision.

The Chinese central bank also pointed out that it is working to improve an international regulatory framework for crypto assets, as the Financial Stability Board suggested. 

“Overall, the connections between crypto activities and systemically important financial institutions, core financial markets and market infrastructures may be limited. However, cryptocurrencies may pose risks in some economies as the application scenarios of cryptocurrencies in payments and retail investments increase,” the PBOC said in the Friday report.