China has taken a decisive step by instituting a comprehensive ban on the tokenization of real-world assets (RWA), categorizing such activities as illicit and high risk. This regulatory action applies not only to domestic projects but also to any initiatives with ties to China, including those operating overseas. Industry observers predict that this will severely limit ventures involving cryptocurrencies and Bitcoin-related RWAs, effectively signaling a halt to any remaining Web3 developments associated with the Chinese market.
The crackdown was disclosed through a joint notice from seven significant financial organizations, including associations that represent sectors such as internet finance, banking, asset management, and payment services. This coordinated announcement underscores the unified approach taken by regulators, emphasizing the seriousness of their stance.
Under the new guidelines, RWA tokenization is now classified alongside cryptocurrencies, stablecoins, and crypto mining activities. Authorities have framed tokenization not as an innovative financial method, but rather as a mechanism that facilitates fraud, speculative actions, and illegal fundraising. Furthermore, regulators asserted that current Chinese law does not support the operation or testing of RWA tokenization projects.
Legal experts view this move as a rare instance of cross-regulatory enforcement, a response typically seen when there is a perceived heightened systemic risk. The definition of RWA tokenization encompasses financing and trading activities conducted via tokens or token-like representations of debt and equity, reinforcing the notion that these practices fall under prohibited financial activities.
The notice clarified that no regulatory authority in China has ever sanctioned RWA-related activities, eliminating any potential for projects to exploit regulatory gray areas. This leaves no room for market participants to argue compliance based on experimental sandboxes or pending approvals.
Authorities delineated three primary scenarios that constitute violations under existing laws: illegal fundraising through token issuance, unlawful public offerings facilitated by trading platforms, and prohibited activities akin to futures trading, including leveraged trading and gambling-related token transactions. Each of these actions is categorized as violations under criminal or securities laws.
In a noteworthy rejection, regulators dismissed claims that tokenization guarantees legal ownership or liquidation rights over underlying assets. This stance applies universally, even to projects that assert compliance, as authorities maintain that risks of spillover and contagion cannot be adequately controlled.
China”s securities regulator has reportedly directed domestic brokerages to cease RWA-related operations in Hong Kong, effectively shutting down a common pathway for mainland-linked initiatives. The notice specifically targets efforts to circumvent oversight through offshore compliance claims or by portraying activities as technology services. Liability now extends to mainland-based personnel and service providers involved in offshore RWA initiatives.
A significant aspect of the enforcement framework is the introduction of a standard that holds parties accountable based on their knowledge of violations. This eliminates the need to prove intent and broadens the exposure for planners, developers, marketers, influencers, and payment providers. Even the presence of a single operational staff member in China could prompt enforcement actions.
Legal analysts have noted that advisory and consulting firms can no longer rely on exemptions related to infrastructure or technology support, effectively dismantling protective measures that previously shielded service providers from direct accountability.
This stringent crackdown contrasts sharply with the regulatory landscape in regions like Singapore, which has positioned itself as a leader in RWA adoption as of 2025. In China, however, these restrictions align with broader government objectives aimed at promoting the digital yuan and tightening control over cross-border capital flows. The timing coincides with the establishment of a Shanghai-based international operations center for the digital yuan, while major firms have been blocked from issuing stablecoins in Hong Kong, further reinforcing centralized control over currency issuance.
By eliminating both RWA projects and their supporting service networks, China has decisively curtailed domestic efforts related to crypto-linked tokenization, reaffirming its commitment to a state-controlled digital finance ecosystem.
