Recently, there have been occasional speculative activities related to virtual currencies and Real World Asset (RWA) tokenization, disrupting economic and financial order and endangering the safety of people’s property. Today, the People’s Bank of China, the China Securities Regulatory Commission, and other eight departments jointly issued the “Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies.”
What are the key contents of this notice? Compared with the “Notice on Further Preventing and Disposing of Risks Related to Virtual Currency Trading and Speculation” (i.e., Document No. 237) jointly issued by the People’s Bank of China and other ten departments in 2021, what revisions have been made to this “Notice” and what are the clear provisions that have been put forward for the first time? This article will interpret it.
The “Notice” mentions that virtual currencies do not have the same legal status as legal tender. Virtual currencies such as Bitcoin, Ethereum, and Tether do not have legal compensation and should not and cannot be used as currency in the market. The “Notice” also made provisions for the recently popular stablecoins for the first time: without the consent of relevant departments in accordance with laws and regulations, no domestic or foreign entity or individual may issue stablecoins pegged to the RMB outside China.
The People’s Bank of China stated that virtual currencies cannot effectively meet the requirements of customer identification and anti-money laundering at this stage, and there is a risk of being used for illegal activities such as money laundering, fundraising fraud, and illegal cross-border transfer of funds. The “Notice” clarifies that the domestic policy on virtual currencies adheres to a prohibition policy, and virtual currency-related business activities are illegal financial activities, which are strictly prohibited and resolutely banned in accordance with the law.
The “Notice” lists in detail virtual currency-related business activities, including carrying out legal tender and virtual currency exchange business in China, virtual currency exchange business between virtual currencies, buying and selling virtual currencies as a central counterparty, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and virtual currency-related financial product transactions. At the same time, illegal financial activities such as suspected illegal issuance of token tickets, unauthorized public issuance of securities, illegal operation of securities and futures business, and illegal fundraising are also strictly prohibited and resolutely banned in accordance with the law.
In addition, overseas entities and individuals shall not illegally provide virtual currency-related services to domestic entities in any form. Since virtual currencies rely on blockchain technology to support peer-to-peer transactions, breaking through the physical concept of “national borders,” related risks are extremely easy to transmit across borders. The “Notice” clarifies for the first time that without the consent of relevant departments in accordance with laws and regulations, domestic entities and their controlled overseas entities shall not issue virtual currencies overseas.
The “Notice” also clarifies the concept and connotation of Real World Asset (RWA) tokenization and emphasizes that carrying out RWA business in China and providing related intermediary and information technology services are suspected of illegal financial activities. RWA tokenization refers to the activity of using encryption technology and distributed ledgers to transform the ownership, income rights, etc. of assets into tokens or other rights and debt certificates with token characteristics, and issuing and trading them.
The “Notice” clarifies that carrying out real-world asset tokenization activities in China and providing related intermediary and information technology services are suspected of illegal issuance of token tickets, unauthorized public issuance of securities, illegal operation of securities and futures business, and illegal fundraising, which should be prohibited. However, relevant business activities carried out relying on specific financial infrastructure with the consent of the competent business department in accordance with laws and regulations are excluded. At the same time, overseas entities and individuals shall not illegally provide real-world asset tokenization-related services to domestic entities in any form.
The “Notice” issued this time clarifies that the National Development and Reform Commission, together with relevant departments, will strictly control virtual currency “mining” activities, comprehensively sort out, investigate, and shut down existing virtual currency “mining” projects, strictly prohibit new “mining” projects, and strictly prohibit “mining machine” production enterprises from providing various services such as “mining machine” sales in China.
The “Notice” mentions that since last year, the hype of virtual currency and RWA-related markets has been rising, and some lawbreakers have taken the opportunity to fish in troubled waters, carrying out illegal fundraising, pyramid schemes, and fraud under the guise of virtual currency, RWA, and mining, or using virtual currency to transfer illegal and criminal proceeds, seriously infringing on the property safety of the public and disrupting the normal economic and financial order.
The “Notice” reiterates that it will strengthen cross-departmental collaboration, strengthen central and local coordination, further improve regulatory requirements for risk monitoring, prevention, and disposal, and maintain a high-pressure situation against virtual currency and RWA-related illegal and criminal activities.
[CCTV News Client]
China’s Crackdown Intensifies: New Notice Spells Trouble for RWA and Cross-Border Crypto Activities
China’s regulatory stance on cryptocurrencies has just taken a significant turn for the worse with the joint issuance of a new “Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies” by eight key government departments, including the People’s Bank of China and the China Securities Regulatory Commission. This move extends beyond the already-comprehensive 2021 ban and introduces several new restrictions that will reverberate through the global crypto market.
Expanded Prohibition Scope: From Trading to RWA Tokenization
While the 2021 notice primarily targeted virtual currency trading and mining, this new document explicitly extends prohibitions to Real World Asset (RWA) tokenization—a rapidly emerging sector that bridges traditional finance with blockchain technology. The notice clearly states that conducting RWA business in China “is suspected of illegal financial activities” including illegal issuance of token tickets, unauthorized securities issuance, and illegal fundraising.
This represents a significant ideological shift from Chinese regulators. RWA tokenization has been viewed globally as a legitimate use case for blockchain technology—one that could increase liquidity, improve transparency, and democratize access to traditionally illiquid assets. By explicitly targeting this sector, Chinese regulators are effectively rejecting the entire value proposition of tokenized real-world assets, not just their speculative applications.
The notice also introduces new restrictions on stablecoins, prohibiting any entity from issuing stablecoins pegged to the RMB without explicit regulatory approval. This is particularly noteworthy given the growing global debate around stablecoin regulation, with China taking an exceptionally hardline position that effectively eliminates any possibility for a Chinese yuan-pegged stablecoin to emerge legally.
Cross-Border Restrictions: Attempting to Build a Regulatory Wall
Perhaps most concerning for the global crypto ecosystem is the notice’s explicit cross-border provisions. For the first time, Chinese regulators have prohibited domestic entities from issuing virtual currencies overseas, effectively attempting to control the entire supply chain regardless of jurisdiction.
This represents a significant escalation in China’s approach to crypto regulation. Rather than simply prohibiting activities within Chinese borders, the government is now attempting to assert extraterritorial jurisdiction over Chinese entities’ crypto activities globally. This creates a compliance nightmare for international crypto projects that may have Chinese team members, investors, or beneficiaries.
The notice also explicitly prohibits overseas entities from providing virtual currency-related services to Chinese entities in any form. This is an impossible standard to enforce completely, but it sends a clear signal that Chinese regulators will view any cross-border crypto activity involving Chinese parties with extreme suspicion.
Market Impact: Limited Direct Exposure, Significant Sentiment Risk
For experienced investors, the immediate market impact of this notice may be less severe than one might expect. Chinese retail investors have been largely excluded from crypto markets since the 2021 ban, and this new notice is unlikely to trigger significant selling pressure from Chinese holders who have already been forced out.
However, the psychological impact should not be underestimated. The explicit targeting of RWA tokenization—a sector many institutional investors have been closely watching—could create significant headwinds for projects in this space. Tokens positioned as RWA platforms may face particular selling pressure, regardless of their actual exposure to China.
The mining restrictions are also noteworthy. By prohibiting “mining machine” production enterprises from providing services in China, regulators are attempting to eliminate the physical infrastructure supporting certain blockchains. This could have long-term implications for the hash distribution of proof-of-work blockchains, though it’s unclear how effectively this can be enforced given China’s historical dominance in mining hardware manufacturing.
Regulatory Arbitrage Becomes Increasingly Difficult
This notice represents a coordinated effort across multiple Chinese government agencies to create a comprehensive regulatory framework that leaves few gaps. The cross-departmental collaboration mentioned in the document suggests a unified front that will be difficult to circumvent through regulatory arbitrage.
For crypto projects attempting to navigate the Chinese regulatory landscape, the message is unambiguous: there is no acceptable path to compliance for core crypto activities. The only exception mentioned is for “relevant business activities carried out relying on specific financial infrastructure with the consent of the competent business department”—a standard so high as to be practically unreachable for most crypto-native projects.
Opportunities Beyond China’s Borders
While this notice represents a significant setback for crypto adoption in China, it may create opportunities in other jurisdictions. As China doubles down on prohibition, countries with more nuanced regulatory approaches may attract Chinese capital and talent seeking alternatives. This could accelerate crypto adoption in markets like Singapore, Switzerland, and parts of the Middle East that have taken more balanced approaches.
The notice may also provide clarity for regulators in other jurisdictions by clearly delineating what China considers unacceptable. This could help shape more thoughtful regulatory frameworks elsewhere that distinguish between legitimate crypto applications and pure speculation.
For institutional investors, this notice reinforces the importance of geographic diversification in crypto portfolios. Projects with heavy Chinese exposure or significant Chinese user bases should be evaluated with heightened scrutiny, while those with truly global distribution may prove more resilient to regional regulatory shocks.
Conclusion: A Hardening Line in the Sand
China’s latest regulatory notice represents not merely a continuation of existing policy but a significant escalation in the government’s approach to cryptocurrency regulation. By explicitly targeting RWA tokenization and attempting to assert jurisdiction over cross-border activities, Chinese regulators are drawing an increasingly clear line in the sand.
For experienced crypto investors, the implications are clear: China is not just closing its doors to crypto but attempting to influence the entire ecosystem. Projects that fail to account for this reality do so at their peril. While direct market impact may be limited in the short term, the long-term implications for blockchain innovation and the global distribution of crypto talent and capital should not be underestimated.