Chinese Government Further Tightens Cryptoassets Regulations

Recently, State Administration for Foreign Exchange and other seven Chinese governments authorities jointly issued an important notice related to the cryptoassets, Notice on Further Preventing and Handling Risks Related to Virtual Currencies and Other Matters (the “Notice”), further improving and strengthening the supervisions over virtual currencies and other cryptoassets in China.

1.  Virtual currencies and related activities are prohibited 

According to the Notice：

(1) Virtual currencies such as Bitcoin, Ethereum, and USDT do not have the same legal status as legal currency, do not possess legal tender status and shall not and cannot be used as legal currency circulating in the market.

(2) Business activities related to virtual currencies, such as exchanging virtual currencies to legal currency, sale of virtual currencies, trading virtual currencies as central counterparties, token issuance financing, and trading in financial products related to virtual currencies in China, are illegal financial activities and shall be prohibited. Overseas entities and individuals shall not illegally provide services related to virtual currencies to domestic entities or individuals in any form.

(3) Without approval of relevant authorities in accordance with laws and regulations, domestic entities and their affiliated overseas entities shall not issue any stablecoin pegged to the Renminbi overseas.

2.  Real-world asset tokenization is strictly restricted 

The Notice clearly states and emphasizes that: 

(1) Real-world asset tokenization (“RWA”) refers to activities that use cryptography and distributed ledgers or similar technologies to convert ownership, income rights, and other asset-related interests into tokens (or digital assets with token-like characteristics) or other rights or debt certificates with token (or digital assets with token-like characteristics) attributes, and to issue and trade such tokens or other rights or debt certificates with token.

(2) Principally, implementing RWA in China, as well as providing related intermediation and information technology services shall be prohibited. 

(3) An exception to point 2 applies only when prior approval has been obtained from the competent authorities in accordance with laws and regulations, and the activities are conducted through officially approved financial infrastructures.

(4) Overseas entities and individuals shall not illegally provide services related to RWA to onshore entities or individuals in any form.

In addition to the above, according to another notice issued by Chinese governments in December 2025, no RWA has been approved by Chinese governments in China, while no further official clarification yet provided regarding the specific identity or criteria of officially approved financial infrastructures. According to the attitudes of Chinese governments, we anticipate that the implementation of RWA in China may be permitted only for government-led pilot projects at this stage.