On Saturday, the People’s Bank of China (PBOC) warned of a resurgence in crypto speculation and vowed to crack down on illegal activities involving stablecoins.

The statement “has erased any ambiguity, speculation and illusions” around China’s stablecoin policies, said Liu Honglin, founder of Man Kun Law Firm.

“Regulators have drawn a concrete red line on what used to be a vague borderline,” he said.

Shares of Yunfeng Financial Group, which has been expanding into cryptocurrency and tokenisation businesses, slumped more than 10% in early trading, putting them on track for their worst day in two months.

Bright Smart Securities and Commodities Group dropped roughly 7% and digital-asset platform OSL Group lost more than 5%.

Interest in virtual currencies surged after Hong Kong passed a stablecoin bill in May, setting up a legal framework for the fiat-based cryptocurrency as the city seeks to become a digital asset hub.

The excitement spilled over the border into China, where cryptocurrency trading has been banned since 2021.

The PBOC statement, issued after a meeting that was attended by 13 government agencies, specifically highlighted concerns about stablecoins, saying they failed to meet requirements for customer identification and anti-money-laundering controls.

In September, sources told Reuters that China’s securities watchdog had advised some local brokerages to pause their real-world-asset tokenisation business in Hong Kong.

Chinese tech firms including Alibaba-backed Ant Group and e-commerce company JD.com paused plans to issue stablecoins in Hong Kong after the PBOC raised concerns about the rise of currencies controlled by the private sector, the Financial Times reported in October.