China has moved to harden its stance on digital assets, issuing a package of rules that observers are calling the toughest set of crypto curbs in the country's history. On February 6, the People's Bank of China coordinated with eight other government departments to publish a notice reaffirming that virtual‑currency related activities are illegal financial activities and explicitly banning the overseas issuance of stablecoins pegged to the renminbi without prior approval.
The new directives are complemented by a practical set of rules from the China Securities Regulatory Commission that for the first time defines tokenized real‑world assets (RWA) and sets out a regulatory framework described as "domestic prohibition, overseas strict regulation." The CSRC's guidance establishes a filing regime for any mainland entity that intends to use domestic assets as the basis for tokenized securities issued abroad, demanding detailed disclosures and permitting filings only when the materials meet regulatory standards.
Regulators framed the moves as both a defense of monetary sovereignty and an effort to choke off channels for illicit capital flows. Officials argued that stablecoins tied to the renminbi can functionally substitute for cash in circulation and, if issued outside China by non‑approved entities, could erode the central bank's control over currency flows and foreign exchange management. The notice also says domestic entities and their controlled offshore affiliates may not issue virtual currencies abroad without specific approvals.
The changes arrive against a backdrop of renewed market interest in stablecoins and RWA tokenization. Hong Kong has been advancing its own stablecoin licensing regime, with the Hong Kong Monetary Authority reporting dozens of applications and signalling a small first tranche of licences as early as March. That divergence — an active Hong Kong licensing push versus Beijing's new restrictions on mainland participants — sets up a delicate cross‑border compliance question for firms with footprints in both jurisdictions.
Industry and legal observers expect the rules to have an immediate chilling effect on projects that had been skirting the edges of compliance. Wang Pengbo, a senior financial analyst, describes the measures as cutting off the main sources of illegal stablecoin issuance and closing off pipelines that allowed offshore tokens to penetrate the domestic market. Lawyers warn that large mainland technology companies that had considered participating in Hong Kong stablecoin schemes are now likely to hesitate, while other forms of participation, such as providing technology or infrastructure services, may still be permissible if structured carefully.
For RWA tokenization — the conversion of ownership or revenue rights in real‑world assets into digital tokens — the CSRC's filing requirement is the most consequential change. The guidance treats tokenized asset‑backed securities as activities comparable to conventional securities and subjects them to a cross‑agency supervisory framework when domestic assets are used as the underlying collateral. Projects that attempt to circumvent domestic rules by issuing abroad face scrutiny on the grounds of "same business, same risks, same rules."
Regulatory authorities signalled that enforcement will be broad and collaborative. Financial regulators and payment supervisors will focus on cutting illicit funding channels; market regulators will police corporate registrations and advertising; and law enforcement will pursue criminal networks that exploit digital assets. The stated objective is to enshrine a long‑term, centrally co‑ordinated regime that prevents the digital‑asset market from becoming a conduit for money‑laundering, capital flight or threats to monetary stability.
In the short term the effect will be to contract certain corners of the market: offshore RMB‑pegged stablecoins and borderline RWA projects lacking transparent asset pools or legal qualifications are likely to be pushed out. Over the medium term the clearer rules may benefit well‑capitalized, regulated institutions that can meet filing criteria and operate within approved corridors. The move also underscores Beijing's larger strategic aim: to shape digital finance so that it serves the real economy while remaining fully subordinate to domestic monetary and regulatory authority.
Globally, the episode will be watched as another example of China's selective embrace of fintech: supportive of distributed‑ledger technology in controlled, permissioned contexts but intolerant of decentralized financial arrangements that can erode state control. For multinational banks, payment firms and crypto platforms, the message is clear — engaging with Chinese assets or markets requires careful legal structuring and rigorous compliance with cross‑border supervisory expectations.