Bitcoin RWA tokenization faces sweeping China ban

China labels RWA tokenization unlawful, focusing on onshore and Hong Kong Web3 service chains.

Seven major Chinese financial industry associations jointly declared real-world asset (RWA) tokenization an illegal financial activity, according to a local report in China.

The China Web Finance Affiliation, China Banking Affiliation, China Securities Affiliation, China Asset Administration Affiliation, China Futures Affiliation, China Affiliation of Listed Firms, and China Fee and Clearing Affiliation issued a discover warning home and worldwide practitioners that RWA actions lack authorized foundation for operation beneath Chinese language regulation.

The assertion listed RWA alongside stablecoins, cryptocurrencies, and crypto mining as main manifestations of unlawful digital foreign money actions, categorizing tokenization initiatives as high-risk, fraudulent strategies relatively than rising monetary applied sciences awaiting regulatory clarification.

China skeptical of actual world asset push

Lawyer Liu Honglin described the coordinated announcement as “a blatant cross-industry, cross-regulatory ‘unified messaging’ operation,” noting that such affiliation collaborations usually happen solely at important junctures in stopping systemic monetary dangers, in response to the report.

The joint discover explicitly outlined real-world asset tokenization as “financing and buying and selling actions by way of the issuance of tokens or different rights and debt devices with token traits,” stating such operations carry “a number of dangers, together with the danger of fictitious belongings, the danger of enterprise failure, and the danger of hypothesis.”

Regulators emphasised that Chinese language monetary regulatory authorities haven’t authorised any real-world asset tokenization actions, eliminating any risk that initiatives might declare to be in regulatory exploration phases or awaiting registration approval, the discover said.

The stance differs from that of Singapore, which leads the worldwide rating in 2025 for RWA adoption, in response to the report. Officers outlined three important violations beneath current Chinese language regulation related to RWA operations.

Tasks issuing tokens to most people whereas elevating funds face unlawful fundraising expenses, whereas facilitating transactions or distributing tokens with out permission constitutes unauthorized public securities choices, in response to the discover. Token buying and selling involving leverage or betting mechanisms could represent unlawful futures enterprise operations, with these characterizations grounded straight in provisions of China’s Legal Legislation and Securities Legislation.

The doc said that RWA token buildings can not assure authorized possession or liquidation of underlying belongings, no matter whether or not mission groups imagine their belongings are real and expertise clear. Regulators decided that threat spillover stays uncontrollable even in supposedly compliant initiatives.

China’s securities regulator is urging home brokerages to halt real-world asset tokenization operations in Hong Kong, the report said.

The warning particularly addressed initiatives trying to bypass rules by way of “real-world asset anchoring,” “abroad compliance path,” and “expertise service output” narratives.

The discover focused not solely mission operators however all the Web3 service ecosystem supporting RWA actions, stating that “home employees of related abroad digital foreign money and real-world asset token service suppliers, in addition to home establishments and people who knowingly or ought to have identified that they’re engaged in digital currency-related companies and nonetheless present providers to them, will likely be held accountable in response to regulation.”

The “realizing or ought to have identified” commonplace establishes a authorized presumption of legal responsibility based mostly on cheap goal judgment relatively than requiring proof of subjective intent, straight negating the frequent Web3 operational mannequin of offshore firm registration with mainland Chinese language employees, in response to the report.

Lawyer Liu famous the usual means groups can not escape accountability by claiming pure expertise service provision or infrastructure help roles.

Venture planners, expertise outsourcing suppliers, advertising and marketing brokers, influencer promoters, and cost interface suppliers all face potential authorized penalties if they supply providers to RWA initiatives focusing on Chinese language customers, the discover said.

The directive said that even hiring a single operations particular person in China might expose ostensibly offshore initiatives to authorized dangers.

The enforcement strategy successfully terminates all the home Web3 service chain constructed round RWA inside China, as supporting providers lose viable enterprise fashions alongside the prohibition on main operations, in response to the report.

The crackdown follows frequent fraudulent actions working beneath RWA branding, with the doc noting that “criminals are profiting from this to advertise associated buying and selling and hypothesis actions, utilizing stablecoins, nugatory cash (reminiscent of π coin), Actual-World Asset (RWA) tokens, and ‘mining’ as a guise to hold out unlawful fundraising, pyramid schemes, and different unlawful actions.”

The timing coincides with China’s push to internationalize its digital yuan by way of a brand new Shanghai operations middle centered on cross-border funds and blockchain providers, whereas concurrently blocking main tech corporations Ant Group and JD.com from issuing stablecoins in Hong Kong to protect the state’s monopoly on foreign money issuance, the report said.