China Expands Crypto Ban: RWA Tokenization Curbs and Yuan Stablecoin Crackdown

China has expanded its cryptocurrency ban by clearly extending restrictions to real-world asset tokenisation and unauthorised offshore yuan-pegged stablecoins. In a joint notice, regulators reaffirmed that all crypto-related activities remain illegal on the mainland. The update also tightens supervision of offshore structures linked to Chinese assets, closing regulatory gaps that had previously existed.

Key Takeaways

• China explicitly bans unauthorised real-world asset tokenisation
• Offshore yuan-pegged stablecoins now require approval
• The digital yuan remains China’s only recognised digital currency

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China Reaffirms Its Comprehensive Crypto Ban

China’s latest directive reinforces its long-standing zero-tolerance approach to cryptocurrencies. Regulators reiterated that virtual currencies, including bitcoin and stablecoins, do not have the same legal status as fiat money and cannot circulate as currency. Activities such as token issuance, trading, fundraising, and technical services are classified as illegal financial conduct.

The notice was issued by the People’s Bank of China alongside agencies overseeing securities regulation, foreign exchange, public security, and economic planning. This coordinated approach signals that enforcement remains a top priority. Authorities cited ongoing speculative activity and financial disorder as reasons for strengthening existing measures.

Crucially, the ban now clearly applies to offshore activity. Domestic companies and their overseas subsidiaries are prohibited from issuing virtual currencies abroad without approval. This eliminates loopholes that previously allowed crypto-linked projects to operate outside China while remaining connected to domestic assets or investors.

Rather than softening its position, China is adapting its enforcement to evolving digital asset structures. Any attempt to bypass restrictions through offshore arrangements remains subject to regulatory scrutiny.

Read Also: China Reasserts Crypto Ban

RWA Tokenisation Moves Out of the Grey Area

Real-world asset tokenisation has now been explicitly addressed by regulators. The notice defines RWA tokenisation as the use of cryptography and distributed ledger technology to convert ownership rights or income claims into digital tokens that can be issued or traded.

Under the updated rules, onshore RWA tokenisation activities are prohibited unless carried out through approved financial infrastructure with regulatory consent. This includes token issuance, intermediary services, technical platforms, and fundraising activities linked to securities or financial operations.

Restrictions also apply to foreign participants. Overseas entities and individuals are banned from providing unauthorised RWA tokenisation services to domestic firms. For offshore token issuance backed by onshore assets, regulators will apply the principle of same business, same risk, same rules, requiring filings or prior approval.

While some industry voices see this as a step toward future regulation, the current framework remains restrictive. Until detailed implementation rules are introduced, RWA tokenisation tied to Chinese assets is largely prohibited.

Read Also: China Crypto Policy 2026: Impact on Bitcoin and Altcoins

Yuan Stablecoins Curbed as Digital Yuan Dominates

The notice further tightens controls on yuan-pegged stablecoins. Regulators stated that no entity, domestic or foreign, may issue offshore stablecoins linked to the renminbi without authorisation. This applies equally to Chinese firms operating abroad and foreign issuers.

Authorities warned that fiat-pegged stablecoins can replicate functions of circulating currency, posing risks to monetary sovereignty and capital controls. Financial institutions are therefore prohibited from offering banking, clearing, or settlement services to virtual currency-related businesses.

At the centre of this policy is the digital yuan. Regulators emphasised that only the central bank-issued digital yuan is legitimate. Private or offshore yuan stablecoins are viewed as incompatible with China’s monetary framework.

This approach reflects China’s broader strategy. While decentralised cryptocurrencies are banned, state-backed digital currency development continues under strict regulatory oversight.

Read Also: China Accelerates Digital Yuan Internationalization with Laos Cross-Border Pilot

Conclusion

China’s expanded crypto ban strengthens its firm grip over digital finance. By explicitly restricting real-world asset tokenisation and tightening rules on offshore yuan-pegged stablecoins, regulators have closed remaining grey areas. Despite speculation about future frameworks for compliant asset digitisation, the immediate message is clear. 

Cryptocurrencies remain illegal, offshore workarounds are restricted, and the digital yuan stands as the only authorised digital currency. For global crypto markets, China’s stance highlights the growing importance of regulatory boundaries in an increasingly divided digital asset landscape.

FAQ

Is cryptocurrency legal in China

No. All cryptocurrency-related activities are illegal on the mainland.

What is real-world asset tokenisation

It is the conversion of ownership or income rights into blockchain-based digital tokens.

Can RWA tokenisation operate in China

Only with explicit regulatory approval and approved infrastructure.

Are yuan-pegged stablecoins allowed

No, unless issued with official approval, including offshore versions.

Why does China support the digital yuan but ban crypto

The digital yuan is state-controlled and aligns with monetary policy.

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