China's central bank has officially classified stablecoins as virtual currencies, incorporating them into the regulatory framework. This move aims to regulate the operational, intermediary, and settlement activities associated with stablecoins, according to Zhao Binghao, head of the Financial Technology Law Research Institute at China University of Political Science and Law. The classification is a strategic measure to block currency substitution and cross-border arbitrage channels. Ye Ningyao, a director at the Beijing Banking Law Society, emphasized that the central bank's decision denies stablecoins any legal status equivalent to fiat currency. This classification prevents stablecoins from being considered as quasi-legal tender, safeguarding the unique status of state-backed currencies, particularly the digital yuan, and ensuring the stability of the financial system.