China Strengthens Measures Against Virtual Currencies, Stablecoins, and RWA Tokenization

TLDR

• China’s central bank reaffirms a blanket ban on crypto activities, including trading, issuance, and mining.
• Virtual currencies like Bitcoin and Ethereum are prohibited from being used as currency under Chinese regulations.
• The government has imposed strict bans on stablecoin issuance linked to the Chinese Yuan without approval.
• RWA tokenization activities are restricted unless explicitly approved by relevant financial authorities.
• China strengthens enforcement through interdepartmental cooperation and enhanced monitoring to detect illegal crypto activities.

China’s central bank and regulators have reaffirmed a blanket ban on crypto activities, including trading, issuance, mining, and unapproved RMB-linked stablecoins. The new directives specifically target the tokenization of real-world assets (RWA), prohibiting activities unless they are explicitly approved. Enforcement against illegal activities related to virtual currencies and offshore operations has been intensified.

Virtual Currency and Tokenization of Real-World Assets Banned

China’s recent notice reiterates that virtual currencies like Bitcoin, Ethereum, and Tether do not have legal tender status. The central bank emphasizes that these currencies cannot be used as currency in the market. Virtual currency-related activities, such as exchange, token issuance, and financing, are now classified as illegal financial activities.

The Chinese government has taken strong measures against foreign entities offering virtual currency services to domestic companies. It has also banned the issuance of stablecoins linked to the Chinese Yuan unless approved by relevant authorities. The regulatory bodies have made it clear that the tokenization of real-world assets falls under similar restrictions, except for activities conducted under designated financial infrastructure with government approval.

Authorities have also emphasized the risks posed by tokenization activities, stating they disrupt economic stability. Any related financial services, including intermediaries or technical providers, must comply with stringent regulatory oversight. The government aims to curb speculative activities that endanger people’s property and national security.

China Coordinated Efforts to Strengthen Enforcement and Risk Prevention

The People’s Bank of China, in collaboration with various government bodies, is strengthening interdepartmental cooperation. They have agreed to improve monitoring systems to detect and prevent activities involving virtual currencies and RWA tokenization. Local governments are required to coordinate with financial, telecommunications, and public security departments to maintain national financial order.

Further, the government is focusing on improving local-level monitoring mechanisms. Provincial authorities must work with central departments to implement and enforce these measures effectively. These coordinated efforts aim to establish a regular system for risk monitoring, ensuring rapid identification of illegal activities.

The authorities also stressed the importance of improving public awareness of the legal risks associated with virtual currencies. Various media channels will be used to inform the public about the harmful effects of engaging in crypto-related businesses. The government’s focus remains on maintaining economic stability and preventing financial crimes linked to virtual currencies and tokenization.

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