Opinion: Have the rules for China's RWA been established?

Author: Spinach Spinach Talks about RWA
Link:

February 6, 2026, a day worth remembering.

Today, the People’s Bank of China, together with eight major departments including the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange, issued the “Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies” (Yinfa [2026] No. 42). At the same time, a more practical attachment—the “Regulatory Guidelines on Domestic Asset-Backed Securities Tokens Issued Overseas”—was also released.

This is not a simple “ban.” If you still think it’s just “China banning crypto again,” then you might have completely misunderstood this document.

Let me break down these two documents in plain language.

In 2021, the eight departments issued a similar document—Yinfa [2021] No. 237, commonly known as the “924 Notice.” That document set the tone for China’s comprehensive crackdown on virtual currencies. Five years later, the final point of the No. 42 document explicitly states: “The ‘Notice on Further Preventing and Disposing of Risks from Virtual Currency Trading and Speculation’ (Yinfa [2021] No. 237) issued by ten departments including the People’s Bank of China is hereby repealed.”

Replacing the old with the new indicates this is not just a patch but a systematic overhaul of rules. So, what is the biggest difference between the new and old documents?

One word: RWA.

The 2021 924 Notice was entirely focused on virtual currencies, and at that time, the concept of “RWA” was almost nonexistent in domestic regulatory language. However, the No. 42 document devotes extensive space to defining and regulating “Real-World Asset Tokenization” (RWA). This itself is a huge signal—regulators officially recognize RWA as a legitimate business form and have decided to set rules for it rather than outright ban it.

Key Point 1: The attitude towards virtual currencies remains unchanged, but the language is more precise.

The first clause of Article 1, Paragraph 1 of the No. 42 document states clearly: “Virtual currencies do not have the same legal status as legal tender.” Bitcoin, Ethereum, USDT, and others are explicitly named and characterized as “not legally redeemable and should not and cannot be used as currency in the market.”

The wording that follows is almost identical to the 924 Notice: activities such as domestic exchanges between fiat and virtual currencies, virtual currency-to-virtual currency exchanges, providing trading intermediary and pricing services, token issuance and financing—all are “strictly prohibited and must be resolutely shut down.” The same applies to foreign entities providing virtual currency services within China.

However, there is an important new statement: “Without the approval of relevant departments in accordance with laws and regulations, no domestic or foreign entity or individual shall issue stablecoins pegged to RMB outside the country.” Note that the document uses “without approval” rather than “absolutely prohibited.” What does this mean? Theoretically, if “approved by relevant departments in accordance with laws and regulations,” RMB-pegged stablecoins could have a compliant pathway. This opening is very narrow but exists.

For virtual currency investors, frankly, there’s nothing new here. The bans that should be enforced will continue to be enforced. Mining operations will be further regulated, advertisements will be shut down, and even company registration names and business scopes are not allowed to include terms like “virtual currency,” “cryptocurrency,” or “stablecoin.”

Key Point 2: RWA is officially defined in departmental-level documents for the first time.

This is the most noteworthy part of the No. 42 document. The second clause of Article 1 provides a very clear official definition:

“Real-World Asset Tokenization refers to activities that use encryption technology and distributed ledger or similar technology to convert asset ownership, income rights, etc., into tokens (coins) or other rights and debt certificates with token-like characteristics, and then issue and trade them.”

This definition has several layers worth unpacking. First, it locks the technical means of RWA to “encryption technology and distributed ledger or similar technology”—meaning blockchain or blockchain-like technology is a necessary condition for RWA. Second, the objects of tokenization include “ownership, income rights, etc.,” covering a broad range—from real estate to accounts receivable, bonds, and fund shares—potentially within reach of regulation. Finally, both “issuance and trading” are included within the regulatory scope.

However, the truly critical part is the next sentence:

“Except for activities conducted with the approval of the business主管部门 in accordance with laws and regulations, relying on specific financial infrastructure to carry out related business activities.”

In plain language: RWA within China is not entirely impossible, but you must obtain approval and conduct it on regulated financial infrastructure. The phrase “specific financial infrastructure” is very intriguing. What qualifies as “specific financial infrastructure”? The document does not specify explicitly, but based on current Chinese practice, candidates include the Shanghai Data Exchange, Beijing International Big Data Exchange, Shenzhen Data Exchange, various local financial asset exchanges, and the digital RMB infrastructure led by the People’s Bank of China.

In other words, the logic of the No. 42 document is not “ban RWA” but “RWA must be conducted within my domain.”

Key Point 3: Domestic asset tokenization going overseas now has an official regulatory framework.

Chapter 4 of the No. 42 document, “Strict regulation of domestic entities engaging in relevant overseas activities,” is the most groundbreaking part. It does not say “no going overseas,” but rather “you can go overseas, but follow the rules.”

Article 14 distinguishes several scenarios: domestic entities issuing RWA as foreign debt must be managed by the NDRC and SAFE; those conducting asset securitization or equity-like RWA based on domestic rights abroad are under CSRC; other forms of RWA are also managed by CSRC in conjunction with relevant departments. The core principle is “same business, same risk, same rules”—whether you issue in Hong Kong or Singapore, as long as the underlying assets are within China, Chinese regulation applies.

What does this mean? The biggest obstacle for Chinese domestic assets going overseas via RWA has always been regulatory gray areas—not technology or market. Many project teams want to do it but dare not because of unclear rules—doing it might be legal or illegal. The No. 42 document finally clarifies the rules: you can do it, but you need approval or filing.

The accompanying “Regulatory Guidelines on Domestic Asset-Backed Securities Tokens Issued Overseas” (hereinafter “Guidelines”) makes the “how-to” more specific.

Key Point 4: The registration system for securities tokenization—providing a clear path.

The “Guidelines” is the most practical document this time. It specifically establishes filing rules for “issuing asset-backed securities tokens overseas based on domestic assets.”

The core process summarized: the domestic controlling entity of the underlying assets files with the CSRC, submitting a filing report, complete issuance documents abroad, and providing detailed information on the domestic filer, underlying assets, and token issuance plan. If the materials are complete and compliant, the CSRC will process the filing and publish it; if not, it will not accept the filing.

Note that this uses “filing” rather than “approval.” Although the CSRC can “seek opinions from relevant state council departments and industry regulators as needed,” the overall system is a filing system, which is much more lenient than approval. This indicates that regulators are cautiously open to domestic asset tokenization for overseas issuance—not giving a green light but not closing the door either.

The “Guidelines” also set a clear negative list: assets prohibited by law from financing, assets harmful to national security, entities with criminal records, under investigation, with major ownership disputes, or assets on the prohibited list for domestic asset securitization are all excluded.

These restrictions are highly consistent with existing regulations on domestic asset securitization and overseas listings of enterprises—regulators are integrating RWA tokenization into the existing securities regulatory framework, not creating a new one.

Key Point 5: The role of financial institutions is strictly defined.

Article 6 of the No. 42 document clearly states: for virtual currency-related activities, financial institutions are strictly prohibited from providing account opening, fund transfer, clearing, and settlement services; but for RWA activities, the restriction is “without approval”—meaning, if the RWA business is compliant and filed, financial institutions are allowed to provide custody, clearing, and settlement services.

This is highly significant for the industry. For RWA projects to grow and strengthen, participation from traditional financial institutions—custodian banks, clearing agencies, payment channels—is essential infrastructure. The No. 42 document separates “compliant RWA” from the negative label of “virtual currency,” clearing policy obstacles for financial institutions to participate in RWA.

Article 15 further stipulates that overseas subsidiaries and branches of domestic financial institutions providing RWA services abroad must do so “prudently and lawfully,” equipped with professionals and systems, implementing KYC, suitability management, AML, and other requirements, and integrating into the domestic financial institution’s compliance and risk management system. This essentially tells Chinese-funded institutions’ overseas branches: you can do this business, but it must be managed centrally and not engage in “regulatory arbitrage” abroad.

How to interpret the overall signals of these two documents?

Looking at No. 42 and the “Guidelines” together, a very clear regulatory logic emerges:

First, virtual currencies and RWA are explicitly separated. The crackdown on virtual currencies continues, a stance that has remained unchanged since 2017. But RWA is no longer broadly categorized as “virtual currency-related business”; instead, it is treated as a legitimate financial business form that can exist within a regulated framework.

Second, domestic RWA adopts a “franchise” model. Doing RWA domestically must be on “specific financial infrastructure” approved by regulators. Without a license or approval, it is considered illegal financial activity. This aligns with China’s consistent regulatory approach—finance is a licensed industry.

Third, overseas asset tokenization within China adopts a filing system. This is the biggest new development. It provides a compliant pathway for high-quality domestic assets to enter global capital markets via RWA. The CSRC, as the main regulator, handles filings rather than approvals, with relatively reasonable thresholds.

Fourth, participation of financial institutions in compliant RWA activities is explicitly permitted. This provides a regulatory foundation for building the ecosystem. Without banks and clearing institutions, RWA remains a house of cards.

From a broader perspective, the issuance of No. 42 and the “Guidelines” marks China’s regulatory shift from “blanket suppression” of crypto assets to “classified regulation.” Virtual currencies will continue to be targeted for enforcement, but RWA—especially those backed by real assets, with compliant structures, and registered with regulators—are being separated from enforcement targets and incorporated into the formal financial regulatory system.

• This is not China embracing crypto, but China embracing tokenization in its own way.

For institutional investors and project teams that have been watching from the sidelines, the game rules are finally clear. The compliant path is established, the negative list is in place, regulators are involved, and the filing process is set. The only question remaining is—are you ready?