Author: Zhang Feng
On November 28, 2025, the People's Bank of China, the Financial Regulatory Administration, the China Securities Regulatory Commission, and thirteen other ministries jointly held a coordination meeting on virtual currency-related work. Subsequently, seven associations, including the China Internet Finance Association and the China Banking Association, issued a risk warning titled "Risk Warning on Preventing Illegal Activities Related to Virtual Currency" (hereinafter referred to as the "Warning"), which once again clarified the regulatory stance on virtual currencies and related activities. The document listed "Real World Asset Tokens" (RWA) alongside stablecoins, air coins, and "mining," sparking widespread discussion in the market about whether RWAs are fully included in the category of "illegal activities related to virtual currencies."
A close reading of the text reveals that while the regulatory authorities express a firm stance, they also demonstrate a rational approach to differentiating between activities of different natures. They do not simply equate RWAs and stablecoins with illegal forms like air coins, but rather emphasize risk warnings and compliance boundaries, leaving room for understanding genuine compliant and prudent innovation.
1. RWA is not simply classified as "illegal activities," but emphasizes "multiple risks"
In the main text of the "Warning," there is a clear distinction in the descriptions of various virtual currency-related activities. For "air coins (such as π coin)," the document explicitly states that they "lack substantial technological innovation, have no clear business application scenarios and value, have opaque issuance and operation mechanisms, and are severely associated with fraud and market manipulation." It emphasizes that these are often linked to pyramid schemes and fraudulent activities. This characterization is clearly negative and prohibitive.
In contrast, for "stablecoins" and "real world asset tokens," the document focuses on risk warnings and current status descriptions. Regarding stablecoins, it points out that they "currently cannot effectively meet customer identification, anti-money laundering, and other requirements, posing risks of being used for money laundering, fundraising fraud, and illegal cross-border fund transfers." Concerning RWAs, the document explains that "financing and trading activities through the issuance of tokens or other rights and bonds with token characteristics carry multiple risks, including false asset risks, operational failure risks, speculative risks, etc.," and clearly states that "currently, no real-world asset tokenization activities have been approved by China's financial management departments."
From the wording, it can be seen that the regulatory authorities do not directly classify stablecoins and RWAs as "illegal activities," but rather emphasize their current risks and unapproved status. This expression contrasts with the explicit prohibition of air coins, reflecting a differentiated regulatory awareness. As a technical path that tokenizes physical assets through blockchain, RWAs have theoretical advantages such as enhancing liquidity and reducing transaction costs. The regulation does not deny their potential value entirely but issues a warning against possible market chaos.
2. The scope of the document focuses on "illegal financial activities," rather than a blanket ban on the entire industry chain
In sections two and three of the "Warning," clear requirements are set for various institutions and the public. Its prohibitive clauses mainly revolve around "illegal financial activities":
- "Domestic institutions and individuals engaging in activities such as the exchange of legal currency and virtual currency, issuance and financing of real-world asset tokens within the territory are suspected of illegal token issuance, illegal fundraising, unauthorized public issuance of securities, illegal operation of futures business, and other illegal financial activities."
- "Overseas virtual currency and real-world asset token service providers directly or indirectly engaging in related business activities within our country also constitute illegal financial activities."
These regulations clearly target unapproved issuance, financing, trading, and service provision activities conducted domestically, with the core focus on the "illegality" of the actions rather than the technology or concept itself. The document requires member units not to provide related services for "domestic issuance and trading" of virtual currencies and RWAs, nor to provide services for related "business activities," with the regulatory targets being specific illegal business behaviors.
This means that if an RWA-related activity:
- Does not involve illegal public issuance or financing within the territory;
- Does not involve providing support for illegal activities within the territory;
- Its operational model complies with current financial laws and regulations, such as through legal channels, targeting qualified investors, and completing necessary regulatory approvals and registrations;
- Especially if it can rely on jurisdictions like Hong Kong, which have established regulatory frameworks for virtual assets, to operate legally and compliantly, while effectively isolating risks from the domestic market;
Then, it may not directly fall within the scope explicitly prohibited by the "Warning." The document aims to cut off the support for illegal activities within the territory rather than prohibit all technology discussions, international compliance practices, or forward-looking research related to RWAs globally.
3. Compliant RWA exploration should be based on legal frameworks and make good use of rules from both regions
The RWAs we discuss should refer to compliant explorations under existing legal frameworks, particularly those that meet the legal requirements of both mainland China and Hong Kong, as well as relevant cross-border legal norms. Since 2022, Hong Kong has gradually established a relatively comprehensive licensing system for virtual asset service providers (VASP) and has made regulations regarding the issuance and trading of tokenized securities and other financial products. In 2023, the Hong Kong Securities and Futures Commission further issued a circular regarding tokenized securities and collective investment schemes, providing guidance for compliant asset tokenization.
In this context, a compliant RWA project may have the following characteristics:
Compliance in issuance, that is, issuing to qualified investors who meet local regulations in permitted jurisdictions (such as Hong Kong), completing necessary registrations or approvals.
Real assets, meaning corresponding to real, clear, and clearly owned real-world assets, and establishing effective auditing, custody, and information disclosure mechanisms.
Technical compliance, meaning meeting technical requirements for cybersecurity, data privacy, and anti-money laundering/anti-terrorist financing (AML/CFT).
Service isolation, meaning that related technical development, legal consulting, asset management, and other services strictly adhere to the laws of the service-providing location and do not involve providing direct support for illegal activities within the territory.
Investor suitability management, meaning strictly implementing investor identity verification and risk tolerance assessments to prevent the spread of risks to the public without identification capabilities.
Such compliant operations are fundamentally different from the "false asset risks," "speculative risks," and behaviors such as illegal fundraising and illegal issuance of securities warned against in the "Warning." The goal of regulatory policy is to "drive out bad money with good money," combat illegal activities, protect investor rights, and maintain financial stability, rather than hinder genuinely valuable and compliant financial technology innovation.
4. The coordination meeting and the "Warning": potential benefits for compliant operations and clear warnings against illegal operations
The convening of this coordination meeting by thirteen ministries and the issuance of the "Warning" by seven associations can be seen as a concentrated response to the current market chaos and a risk cleanup. Its core impact lies in:
Clarifying red lines and purifying the market: The most direct effect is to severely crack down on and eliminate activities masquerading as RWAs and stablecoins that engage in pyramid schemes, fraud, and illegal fundraising (especially air coins like π coin), thereby legitimizing the industry and preventing "bad money from driving out good money."
Strengthening institutional responsibility: It requires banks, payment platforms, securities firms, internet platforms, and other institutions to enhance due diligence, cut off funding, publicity, and technical support channels for illegal activities, thereby increasing the operational costs and risks of illegal activities.
Educating the public and enhancing awareness: By warning the public of risks through authoritative channels, it helps reduce irrational speculative sentiment and cultivate a rational investment mindset.
For institutions and projects that consistently pursue compliant operations, this policy signal may bring cautious market sentiment in the short term, but in the medium to long term, it is indeed beneficial: first, the clarity of regulation reduces the uncertainty of "gray areas," making the rules for compliant operations clearer; second, the purification of the market environment helps compliant projects gain more rational market attention and resource allocation; third, emphasizing "risks" and "unapproved" rather than "blanket prohibition" leaves room for future compliant pilot projects when conditions mature and rules are clarified.
5. Rational considerations under a firm attitude: differentiated treatment and risk-based approach
Overall, the actions of the thirteen ministries and seven associations demonstrate a firm attitude but rational thinking in regulatory wisdom.
The firm attitude is reflected in: zero tolerance for any form of illegal financial activities, resolutely safeguarding national financial security and social stability; clearly prohibiting and severely cracking down on behaviors that attempt to circumvent the current legal framework to engage in illegal issuance, trading, and service provision within the territory; and promptly addressing current market speculation hotspots to control risks.
The rational thinking is reflected in: differentiated treatment of different types of virtual currency-related concepts, prohibiting activities with obvious fraudulent attributes like air coins, while focusing on warning about the inherent risks and current regulatory status of stablecoins and RWAs; risk-based, with regulatory measures focusing on the illegality and substantive risks of specific behaviors rather than a blanket denial of technology or concepts; leaving room, as it emphasizes "unapproved" and risks while not closing off the possibility of compliant exploration in the future under the premise of improving rules and controlling risks.
This rationality stems from a profound understanding of the complex relationship between financial innovation and risk prevention. Blockchain technology and asset tokenization have their potential value, but they must develop in an orderly manner within effective legal and regulatory frameworks. The current regulatory posture represents a cautious balance prioritizing the prevention of real risks while leaving space for future compliant development.
In summary, the coordination meeting of the thirteen ministries and the "Risk Warning" from the seven associations list RWAs and stablecoins as areas of risk concern but do not simply equate them with illegal activities like air coins or impose a blanket ban. The core of the document is to combat various illegal financial activities conducted domestically and their industrial chain support, aiming to delineate red lines, purify the market, and protect investors.
For market participants, the key is not to fear the concepts but to respect the law and the risks. Any exploration involving RWAs or stablecoins must prioritize compliance, strictly adhere to domestic and foreign laws and regulations, especially not involving illegal issuance, trading, or providing services for such activities within the territory. Compliant and prudent exploration within existing legal frameworks, particularly in jurisdictions like Hong Kong that have established relevant rules, remains a possible path.
This regulatory statement serves, in the short term, as a "warning sign" and "cleaner" for chaos, while in the long term, it may be a "traffic light" and "cornerstone" for the industry's move towards standardized development. It conveys a clear message: Chinese financial regulation maintains a rational observation and assessment of cutting-edge technologies while upholding safety bottom lines. There is both attitude and rationality, which may be the regulatory norm that emerging financial technology sectors in the Chinese market must understand and adapt to for long-term development. Future opportunities will undoubtedly belong to those who can embrace technological innovation while deeply understanding and adhering to the spirit of compliance.
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