SS #53 - PBoC Reaffirms Crypto Ban and Flags Stablecoin Risks

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Good morning, and welcome to December as we enter the close of 2025.

Starting in Asia, the People's Bank of China (PBoC) has forcefully re-affirmed its blanket ban on all digital asset operations. The PBoC specifically targeted stablecoins, labeling them a major threat to financial security due to failures in meeting AML/KYC standards and posing risks related to money laundering, fraudulent fundraising, and illegal cross-border transfers. Conversely, a major financial entity is preparing to embrace the digital dollar in the West. Sony Bank, a subsidiary of Sony Financial Group, is reportedly planning to issue a U.S. dollar-pegged stablecoin in the United States as early as fiscal year 2026. To facilitate this, Sony Bank is looking to establish a dedicated U.S.-based unit, has applied for a U.S. banking license (filed in October), and is partnering with U.S.-based stablecoin issuer Bastion to leverage its infrastructure.

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In Today's Edition:

• Headline: Bitcoin Risk Pushes S&P to Downgrade USDT to 'Weak'

• Quick Bites: Sony Bank to Launch US Stablecoin for Games and Anime

• Yield of the Week: 14% APY on Re

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HEADLINE

PBoC Reaffirms Crypto Ban and Flags Stablecoin Risks

State of play: The People's Bank of China (PBoC) has forcefully re-affirmed its blanket ban on all digital asset operations, specifically calling out stablecoins as a major threat to financial security due to AML/KYC risks.

• The PBoC has issued its strongest public statement since the 2021 ban, vowing to "severely crack down" on illegal crypto activities following a multi-agency meeting.

• Stablecoins were explicitly flagged for failing to meet regulatory standards (KYC/AML) and posing risks related to money laundering, fraudulent fundraising, and illegal cross-border transfers.

• While Hong Kong embraces crypto, Beijing has demonstrated a willingness to intervene, recently pausing RWA tokenization and stablecoin issuance efforts by mainland tech giants in the special administrative region.

What’s Next: Increased enforcement against decentralized and underground crypto activity in mainland China will occur, while the PBoC aggressively pushes the digital yuan and regulatory tensions persist in Hong Kong.

Why it Matters: This news is crucial because it eliminates any hope for short-term regulatory easing in China and spotlights stablecoins, a critical global crypto component as a priority enforcement target, thus limiting the potential scale for globally compliant stablecoin adoption.

Our Take: The strategic imperative for global crypto firms is to fully de-risk from mainland China, focus compliant business efforts on the Hong Kong gateway, and concentrate on building robust, regulated stablecoin infrastructure in Western jurisdictions.

QUICK BITES

• Stablecoins drive 90% of Brazil’s crypto volume.

• Sony Bank to launch US stablecoin for games and anime.

• Truther to launch non-custodial USDT Visa card in El Salvador.

• Tether shuts down Uruguay mining operations over energy tariffs.

• Visa taps Aquanow to expand stablecoin settlement across Europe, Middle East, and Africa.

• Israel’s central bank signals improved stablecoin oversight as digital shekel plans advance.

• Ethena-incubated DEX Terminal Finance abandons launch after Converge chain fails to materialize.

YIELD OF THE WEEK

Solomon Labs sUSDv: 12.8% APY

• Solomon is introducing USDv, a non-rebasing, composable stablecoin on Solana that aims to convert currently idle stablecoin capital within the DeFi ecosystem into productive, yield-earning assets.

• Yield is generated by staking USDv to create sUSDv, where all rewards are distributed directly to the staking contract, causing the sUSDv token to appreciate relative to USDv over time (a ratio-based yield model).

• Unstaking sUSDv involves a seven-day cooldown period, after which the user can withdraw their initial USDv deposit plus all accrued yield, while sUSDv remains fully transferable for use across other Solana DeFi protocols.

Re reUSDe : 14% APY

• The Re Protocol utilizes blockchain technology to connect decentralized finance (DeFi) with the multi-trillion-dollar global reinsurance market, aiming to introduce transparency and efficiency into an historically opaque industry.

• User deposits are held in Insurance Capital Layers (ICLs), which function as on-chain custody vaults and allocate capital to real-world reinsurance contracts; the reUSDe performance token absorbs the first-loss risk of this portfolio.

• The reUSDe token offers high historical target returns (16%–25% net annual) in exchange for absorbing first-loss risk, with the price compounding daily, but redemptions are subject to a pro-rata quarterly process based on actuarial release of surplus capital.

Strata jrUSDe: 21.36% APY

• OnRe is a licensed on-chain asset manager that uses digital assets as collateral to underwrite real-world reinsurance, aiming to provide DeFi users with resilient, institutional-grade returns uncorrelated to crypto market volatility.

• The flagship token, ONyc (On-Chain Yield Coin), is designed to allocate stablecoin collateral for reinsurance underwriting and other strategies, targeting a minimum base return of 16% APY sourced from both reinsurance performance and collateral yield.

• ONyc utilizes a multi-collateral approach to manage risk, launching initially with sUSDe via a partnership with Ethena to ensure stable on-chain yield, with plans to diversify the collateral base using assets like USyc and USDG.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.