China’s Shenzhen authorities warn against stablecoin investment scams as public interest rises

China's Shenzhen government has issued an official warning against illegal financial activities disguised as investments in stablecoins and other crypto assets as stablecoins gain increasing public attention.

In a notice released on Monday, the financial authorities in the southeastern Chinese city stated that certain unscrupulous entities are exploiting the public's limited understanding of stablecoins, using terms like "financial innovation" and "digital assets" as promotional hooks to lure individuals into investment scams.

"These entities exploit new concepts such as stablecoins to hype up so-called investment projects involving 'virtual currencies,' 'virtual assets,' and 'digital assets,'" said the city's Office of the Special Working Group for Preventing and Combating Illegal Financial Activities in a translated notice.

"They engage in false public advertising to solicit funds from the public, giving rise to illegal activities such as fundraising, gambling, fraud, pyramid schemes, and money laundering," the authorities said.

The Shenzhen government's warning comes as stablecoins have become a hot topic, with Pan Gongsheng, the governor of China's central bank, acknowledging last month that stablecoins and central bank digital currencies are reshaping the global payment infrastructure.

In May, Hong Kong's Legislative Council passed a stablecoin bill, establishing a licensing regime for stablecoin issuers. Then, last month, the U.S. Senate passed the GENIUS Act, a landmark stablecoin bill, advancing it to the House for further consideration.

Christopher Hui, Secretary for Financial Services and the Treasury in Hong Kong, said in a Monday interview with the local newspaper Ming Pao that the region might issue stablecoin licenses this year, but the number of licenses granted is expected to remain limited.