Authorities in the Chinese city of Shenzhen have warned residents about fraudulent investment schemes tied to digital assets and stablecoins.

In a statement published on July 7, the city’s Office of the Municipal Task Force for Preventing and Combating Illegal Financial Activities cautioned against deceptive platforms posing as legitimate crypto investment opportunities.

According to the task force, bad actors are exploiting public enthusiasm for digital assets. They are promoting false investment opportunities using terms like “stablecoins,” “virtual currency,” and “digital assets.”

These groups use flashy advertising to lure victims into illegal activities, including pyramid schemes, gambling operations, fraud, and money laundering.

The statement emphasized that such schemes violate China’s financial regulations. According to the authorities, most of these organizations are unlicensed and are illegally raising funds from the public. In such cases, any financial losses are not protected and must be borne by those who invested in the fraudulent projects.

As a result, the city urged investors to avoid offers that promise unrealistic returns and report suspicious platforms.

According to the statement:

“If you find that relevant institutions are engaged in illegal fundraising in the name of investing in stablecoins, please report it to the non-leading department of the city or district or the public security department in a timely manner. The relevant departments will verify the reported clues, crack down on them according to law, and reward the informants according to regulations.”

Stablecoins draw international attention

Shenzhen’s warning comes amid a global rise in stablecoin adoption, with demand growing in both emerging and developed markets.

Stablecoins, which are digital assets pegged to fiat currencies like the US dollar, have gained popularity for offering price stability in volatile markets. This utility has made them a go-to option for users looking to store value or transact across borders.

The stablecoin market, worth an estimated $256 billion, is primarily dominated by US dollar-pegged tokens like Tether’s USDT and Circle’s USDC.

Due to this, Chinese companies such as JD.com and Ant Group have reportedly expressed interest in developing CNY-pegged stablecoins. This move aims to counterbalance the dominance of US dollar-based assets and increase the Chinese yuan’s international use.

However, authorities in the US are also working on further entrenching the dominance of dollar-based assets.

As a result, US lawmakers recently introduced the GENIUS Act—a new bill aimed at regulating and promoting stablecoin innovation. US Treasury Secretary Scott Bessent recently stated that the regulation would allow dollar-linked stablecoins to exceed a $2 trillion market cap.

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Crypto Journalist

Amin Ayan

Crypto Journalist

Amin Ayan

About Author

Amin Ayan is a crypto journalist with over four years of experience in the industry. He has contributed to leading publications such as Cryptonews, Investing.com, 99Bitcoins, and 24/7 Wall St. He has…

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July 7, 2025

Authorities in Shenzhen have issued a warning to residents about fraudulent financial schemes posing as stablecoin investments, as rising interest in stablecoins attracts unscrupulous actors.

In a notice released Monday, Shenzhen’s Office of the Special Working Group for Preventing and Combating Illegal Financial Activities said some entities are leveraging buzzwords like “financial innovation” and “digital assets” to promote scams disguised as legitimate opportunities.

“These entities exploit new concepts such as stablecoins to hype up so-called investment projects involving ‘virtual currencies,’ ‘virtual assets,’ and ‘digital assets,’” the office said.

Stablecoin Scams Pose as Innovative Investments

Authorities cautioned that stablecoin schemes often involve illegal activities like fraudulent fundraising, gambling, pyramid schemes, and money laundering.

The advisory comes as stablecoins gain global attention. Pan Gongsheng, governor of China’s central bank, recently acknowledged that stablecoins and central bank digital currencies are transforming international payment systems.

Meanwhile, Hong Kong has taken steps to regulate the sector, with its Legislative Council passing a stablecoin bill in May to establish a licensing framework for issuers.

On the international stage, the U.S. Senate advanced the GENIUS Act last month, a landmark stablecoin bill now awaiting House deliberation.

Hong Kong’s Financial Secretary Christopher Hui added Monday that the city could begin issuing stablecoin licenses later this year, but suggested approvals would be limited.

Last week, the Hong Kong government unveiled its latest policy statement, outlining plans to accelerate real-world asset tokenization and expand the city’s crypto licensing regime.

The new “LEAP” framework focuses on legal clarity, ecosystem growth, real-world adoption, and talent development, with a stablecoin licensing regime set to launch on August 1.

The government also plans to regulate tokenized government bonds and ETFs, paving the way for secondary market trading of these products on licensed digital asset platforms.

It aims to expand tokenization efforts into sectors like metals and renewable energy, highlighting use cases such as gold and solar panels.

Stablecoins Edge Closer to Mainstream Adoption

Stablecoins have emerged as one of crypto’s rare success stories, capturing the attention of corporations and regulators alike.

Recent reports that Amazon, Walmart, and other major companies are exploring stablecoin payments sent ripples through traditional finance, briefly pushing stablecoin transaction volumes ahead of Visa’s in 2024.

Frank Combay of Next Generation said regulatory clarity, especially Europe’s MiCA framework, has unlocked stablecoins’ growth potential by removing the biggest barrier: uncertainty.

He believes stablecoin ecosystems can reduce transaction costs by over 90% and are becoming increasingly attractive to both consumers and corporations.

In the US, the proposed GENIUS Act could mark a turning point. Passed by the Senate and awaiting House review, the bill would require stablecoins to be backed by U.S. Treasuries, mirroring existing models from Tether and Circle.

Supporters argue this could strengthen the dollar’s dominance in digital finance, while critics worry it could expand federal debt.