The central bank and key regulators of China have reaffirmed a blanket ban on crypto-related operations. The renewed directive imposes a strict prohibition on crypto trading, mining, issuance, and other related services via offshore channels or even domestically. As per the official joint statement of the People’s Bank of China and the regulators, they are going to increase their crackdown on unapproved RMB-associated stablecoins. Hence, this sudden hardline implementation raises concerns over a significantly negative impact on the market amid the extended bear market.

China Bans RWA Tokenization in Absence of Regulatory Approval

In line with the joint notice of the central bank and other Chinese regulators, crypto and related activities are no longer a legal tender within the jurisdiction. Authorities stressed the ban on all business operations dealing with virtual currencies, such as derivatives, token issuance, exchange services, and linked financial products. At the same time, they are also prohibiting crypto-related services for Chinese citizens, fully closing previously existing loopholes that permitted offshore participation.

Apart from that, the regulators have also clarified their stance on the tokenization of real-world assets. Specifically, they deem RWA tokenization as the transformation of income rights or ownership of financial or physical assets into blockchain-powered tokens. Thus, the regulators have banned this within the Chinese jurisdiction, unless an explicit approval is available within the specified infrastructure. Keeping this in view, any unauthorized RWA tokenization activity may be considered in the category of illegal fundraising, unlawful futures and securities operations, or unauthorized issuance of securities.

Authorities Prohibit on RMB-Pegged Stablecoin Issuance

According to the People’s Bank of China’s directive, stablecoins, particularly those pegged to the Chinese yuan, stand as a crucial regulatory concern. As they reportedly replicate specific monetary functions, the authorities categorize them as a great risk for monetary sovereignty of the country. As a result, without a proper regulatory consent, no individual or organization, whether foreign or domestic, can issue stablecoins that use RMB as collateral. Moreover, the notice also reinforces the increase in crackdown on such illegal activities to ensure the country-wide ban on all crypto operations.