China Bans RWA for First Time: 7 Agencies’ Biggest Crypto Crackdown Since 2021

Seven major Chinese financial industry associations jointly issued a risk warning, marking the most comprehensive crypto crackdown since the 2021 ban that drove all crypto exchanges out of the country.

The associations cover banking, securities, funds, futures, payment clearing, listed companies, and internet finance. They stated that all crypto-related business activities, including stablecoins, airdrops, mining, and, notably, real-world asset (RWA) tokenization, are illegal in China.

RWA Tokenization Enters Regulatory Crosshairs

The statement, which was issued on Dec 5, explicitly noted that Chinese financial regulators have “not approved any real-world asset tokenization activities,” marking the first official prohibition of RWA in the country.

A researcher explained that the last time this coalition mobilized was September 24, 2021. It was when 10 government departments jointly issued the “Notice on Further Preventing and Disposing of Risks from Virtual Currency Trading Speculation.” That action forced all cryptocurrency exchanges to exit China and shut down all mining operations. China’s share of global Bitcoin hashrate plummeted from 75%.

This move comes as global RWA tokenization surpasses $30 billion in market size. Major players like BlackRock’s $2 billion BUIDL fund—tokenized by Securitize and accepted as collateral on Binance, Crypto.com, and Deribit—are driving mainstream adoption.

Chinese regulators appear concerned that RWA tokenization could become a sophisticated tool for capital flight. The mechanism would allow individuals to convert domestic assets into tokens, transfer them to offshore wallets, and exchange them for foreign currency—all bypassing traditional banking and foreign exchange controls.

Enforcement Tightens With Multi-Agency Coordination

The statement reemphasized that virtual currencies, including stablecoins and tokens such as Pi coin, lack legal status and cannot be circulated in China. Individuals and organizations may not issue, exchange, or raise funds via RWAs or virtual currencies within mainland China. This restriction also applies if offshore companies employ staff based in China.

The coordinated action follows the PBoC’s November 28 meeting with top government officials. The authorities declared stablecoins a form of virtual currency subject to prosecution.

A December report noted a 37% year-on-year increase in money laundering involving virtual assets, reinforcing the push for strict enforcement.

The seven associations’ joint statement creates what analysts describe as a “four-layer blockade.” This includes cutting off mining infrastructure, blocking stablecoin payment channels, sealing RWA pathways, and eliminating fraudulent schemes like Pi Network.

The warning also draws a clear boundary with Hong Kong’s crypto-friendly approach, stating that “mainland staff of offshore virtual currency service providers” will face legal consequences. China has instead promoted the digital yuan (e-CNY) as a state-approved alternative.

Hong Kong launched its stablecoin licensing regime on August 1, 2024, attracting 80 applicants, with first approvals expected in early 2026. Licensed platforms like HashKey and OSL continue to operate virtual asset exchanges. The city also permits RWA tokenization pilots, though strictly limited to offshore assets and non-mainland users.

Youth Discontent Simmers Beneath Surface

The ban sparked a heated online debate, particularly among young investors who feel excluded from global crypto opportunities. Analysis by BigNews highlighted youth frustration, driven by hopes for quick wealth amid Bitcoin’s rally and crypto-friendly U.S. regulations.

Discussions on online communities reveal disappointment over the policy gap between China and Western nations. Critics argue that blanket bans stifle innovation alongside legitimate investor protection.