China has significantly tightened its regulatory grip on the cryptocurrency space, issuing a sweeping ban on the unapproved offshore issuance of yuan-linked stablecoins. The move also extends to tokenized real-world assets (RWAs), signaling a robust effort by Beijing to maintain control over its financial sovereignty and monetary system.
In a joint notice released by the People’s Bank of China and seven other key state agencies, authorities declared that all cryptocurrency-related activities remain illegal within mainland China. This directive explicitly broadens enforcement to encompass the tokenization of real-world assets and the offshore issuance of stablecoins pegged to the yuan. The regulators cited concerns that speculative activities tied to virtual currencies and RWA tokenization have disrupted financial order.
The notice reiterated Beijing’s long-standing position that cryptocurrencies, including Bitcoin and stablecoins like USDT, do not possess the same legal status as fiat currency and should not circulate as money. A wide array of crypto-linked business activities within China are considered illegal financial activities, such as converting crypto to fiat, exchanging tokens, acting as a central counterparty, and providing information or pricing services for transactions.
Authorities have adopted a more explicit stance on yuan-linked stablecoins, stating that no entity or individual, whether inside or outside China, may issue offshore stablecoins pegged to the renminbi without approval from relevant regulators. This move aims to prevent the creation of “shadow yuan” instruments operating outside the country’s official monetary system.
The directive also sharpened language around RWA tokenization, defining it as the use of cryptography and distributed ledger technology to convert ownership or income rights into token-like certificates for issuance and trading. Such activities in China are to be prohibited unless conducted on specific financial infrastructure with competent authority approval. Furthermore, foreign entities and individuals are barred from illegally providing RWA tokenization services to domestic counterparties.
Domestic entities, along with their controlled offshore entities, are now prohibited from issuing virtual currencies abroad without the necessary consent. For RWA tokenization conducted overseas that is based on domestic rights or assets, a “same business, same risk, same rules” supervision approach will be applied, requiring relevant approvals or filings.
These measures align with China’s broader strategy of restricting private digital currencies while simultaneously advancing its state-backed digital yuan (e-CNY). The government has been actively expanding the e-CNY’s role, including allowing interest payments to encourage wider adoption.