Top financial regulators in China have significantly expanded the current ban on cryptocurrencies. This expansion particularly targets stablecoin issuances and the tokenization of real assets.
The joint notice was issued on February 6 by eight agencies, including the People's Bank of China and the China Securities Regulatory Commission. This notice reflects the most stringent capital control measures since the historic ban in 2021 on Bitcoin mining and trading.
Beijing closes external loopholes in the new stablecoin regulations
Regulatory agencies reported that the recent surge in virtual asset activities poses a direct threat to the stability of the financial system in the country and its monetary sovereignty, as stated in the report.
Under the new rules, foreign entities are completely prohibited from providing stablecoin services or tokenizing assets for Chinese residents.
The campaign also focused, more importantly, on what is known as the "external loophole" by prohibiting local companies and their foreign branches from issuing digital currencies without explicit government approval.
The People's Bank of China emphasized, according to the announcement, that stablecoins, especially those linked to fiat currencies, bear the characteristics of sovereign money.
Officials indicated that these private digital assets undermine the state's ability to control the money supply, and also claimed that these assets circumvent stringent anti-money laundering protocols and know-your-customer standards.
The notices specifically banned any entity from issuing stablecoins denominated in renminbi abroad, as analysts viewed this move as a defense of the digital yuan e-CNY, the official digital currency of the People's Bank of China.
Targeted tokenization of real-world assets
The guidelines also targeted the burgeoning real-world asset (RWA) tokenization sector valued at $24 billion.
Regulators have reclassified unauthorized tokenization—such as owning real estate or securities in a fragmented manner—as "illegal public securities offerings" and "unauthorized futures contract activities."
The notice stated that activities involving the tokenization of real-world assets within China must be banned, as well as the provision of intermediary services and related IT services suspected of involvement in the issuance of illegal tokens, unauthorized public offerings of securities, or operating securities and futures businesses illegally, or illegally raising funds, or other illegal financial activities.
The notice leaves a narrow path for activities conducted on government-approved financial infrastructure.
However, any company seeking to tokenize outside the country must comply with stricter compliance standards and obtain local approval.
The central government intends to launch a collaborative framework that integrates local and national oversight to implement these measures.
The coordinated approach aims to eliminate the regulatory arbitrage that Chinese tech and finance companies previously exploited, which often used neighboring jurisdictions to experiment with blockchain-based assets outside of Beijing's direct authority. These companies exploited neighboring jurisdictions to experiment with blockchain-based assets outside of Beijing's direct oversight.
By tightening oversight on both stablecoins and RWAs, Beijing has sent a signal that the next generation of digital finance must remain fully within authorized state systems that require permission.