China’s Strict Stablecoin Ban Compared to Japan’s Push for Regulated Innovation

China’s central bank has intensified its stance against stablecoins, describing them as a systemic risk and reiterating its uncompromising opposition to privately issued digital currencies. Speaking at the 2025 Financial Street Annual Meeting in Beijing, PBOC Governor Pan Gongsheng argued that stablecoins heighten global financial instability, referencing dangers such as money laundering, terrorist funding, and threats to monetary sovereignty—especially for smaller nations, according to

. Pan stated, “Stablecoins, as a financial activity, still fall short of fundamental regulatory requirements,” highlighting deficiencies in anti-money laundering (AML) and customer verification compliance, as reported by . Since 2017, the PBOC has enforced a comprehensive prohibition on cryptocurrency trading and mining, instead promoting its official digital currency, the e-CNY, as a more secure option. The central bank also revealed intentions to keep a close watch on international stablecoin trends, reflecting apprehension about external impacts on China’s financial system, according to .

Recent crackdowns highlight China’s uncompromising regulatory approach. Authorities sentenced five people to prison for their involvement in a $166 million crypto-related money laundering operation, demonstrating the PBOC’s resolve to eliminate illegal activities tied to digital currencies, as noted by

. At the same time, major tech firms Ant Group and JD.com withdrew their plans to launch stablecoins in Hong Kong after regulators reaffirmed that currency issuance must remain under state control. These actions are part of a broader campaign to restrict private sector stablecoin initiatives, even as international regulators continue to debate their place in the financial system.

In contrast, Japan is advancing with regulated stablecoin projects. JPYC, the nation’s first stablecoin backed by the yen, debuted in October 2025 under updated Payment Services Act rules, according to

. Fully backed by yen deposits and government securities, JPYC seeks to connect traditional financial systems with blockchain commerce and DeFi solutions. Its issuer, JPYC Co., is aiming for a $66 billion market capitalization within three years, leveraging collaborations with companies like HashPort and Asteria to embed JPYC into payment and enterprise platforms, . Experts estimate JPYC could secure 2% of the worldwide stablecoin market, potentially reaching $70 billion by 2030 as interest in yen-based digital assets rises, according to .

Elsewhere, DBS Bank and Goldman Sachs completed the first interbank over-the-counter (OTC) cryptocurrency options transaction, marking a milestone in institutional adoption of digital assets. The cash-settled

and Ether options, designed to mitigate risks associated with crypto-linked products, represent progress toward integrating crypto derivatives into mainstream finance, . By mid-2025, DBS had executed $1 billion in crypto options and structured notes, with trading volumes increasing by 60% from the previous quarter. “This transaction illustrates how banks can apply conventional risk management to digital assets,” said Jacky Tai of DBS, while Max Minton of Goldman Sachs pointed to the growing potential for interbank crypto derivatives trading, as reported by .

With the global stablecoin market approaching $310 billion in value, differing regulatory approaches are shaping the industry’s future. While China’s PBOC continues to restrict stablecoin development at home, Japan and Singapore are emerging as centers for regulated digital finance. These divergent policies highlight the ongoing balance between caution and innovation in the rapidly evolving crypto sector.