China has once again reinforced its hardline stance on crypto. The country’s central bank and several financial regulators have released a new joint notice that bans yuan linked stablecoins that do not have official approval.
The notice also says that most real world asset tokenization activities are now considered illegal financial activities.
This decision shows that Beijing wants stronger control over digital finance. The government aims to stop money from moving out of the country and to protect the leading role of its state backed digital yuan.
Yuan Stablecoins Now Fully Restricted
Under the new directive, any stablecoin linked to the Chinese yuan (renminbi) cannot be issued or circulated without direct approval from Chinese authorities. This includes projects launched overseas.
Regulators specifically warned against offshore yuan-pegged stablecoins, stating that Chinese companies are not allowed to assist foreign affiliates in issuing such tokens. The government believes these digital assets could create financial risks beyond its control.
Authorities argue that stablecoins tied to the yuan could:
- Enable capital flight outside China
- Increase risks of money laundering
- Undermine the country’s monetary sovereignty
- Compete with the digital yuan (e-CNY)
By shutting down private yuan stablecoin projects, China is ensuring that only state-approved digital currency systems can operate.
RWA Tokenization Labeled Illegal Financial Activity
The notice also focuses on real world asset tokenization. This is a global trend where physical assets or traditional financial assets are turned into digital tokens using blockchain technology.
Chinese regulators say RWA tokenization means using blockchain or similar technology to convert ownership rights or income rights from assets into tradable digital tokens.
If these activities are not officially approved and are not carried out within government recognized financial systems, they will now be treated as illegal financial activities.
This means:
- Tokenizing property, bonds, commodities, or income streams on blockchain platforms is banned
- Technical service providers supporting these projects may also face restrictions
- Only state-controlled or specially licensed frameworks could be allowed in the future
The decision forces Chinese firms to either abandon decentralized RWA projects or shift them into tightly controlled, permissioned systems monitored by authorities.
Crypto Still Has No Legal Status in China
Chinese regulators have repeated that cryptocurrencies are not legally recognized as money. They cannot be used as a payment method in the market like regular currency.
Authorities also said that many crypto related services are illegal unless the government gives special approval. These include
- Token issuance
- Crypto trading
- Exchange services
- Crypto related financial products
Officials believe that crypto speculation has been disturbing the financial system and putting people’s money at risk. Because of this, the government says strict rules are necessary to protect national security and maintain social stability.
Protecting the Digital Yuan
One of the main reasons behind this crackdown is to protect China’s official digital currency, the digital yuan also known as e CNY.
Private stablecoins linked to the yuan, especially those created outside China, could compete with the digital yuan. This could reduce the government’s control over the country’s money supply. By making approval mandatory for any renminbi linked token, Beijing is making sure it remains the only authority in charge of yuan based digital money.
Experts believe this strategy stops private companies from influencing China’s financial system. In simple words, if a digital currency is not controlled by the state, it is not allowed.
The Hong Kong Twist
This decision is interesting because only a few months ago, reports said that major Chinese tech companies like Ant Group and JD.com were planning yuan stablecoin projects through Hong Kong.
Hong Kong follows a different financial system and has been more open to crypto innovation. However, these projects were reportedly paused after mainland Chinese regulators gave guidance that limited private involvement in renminbi linked stablecoins.
This shows that Beijing is working to close any loopholes that companies might use to launch yuan based digital assets outside mainland China.
Part of a Long Crypto Crackdown History
This move is just another step in China’s long history of strict rules against cryptocurrency. Over the past ten years, the government has taken many actions such as banning crypto exchanges, stopping mining operations, limiting financial institutions from offering crypto services, and blocking speculative trading platforms.
Even with these restrictions, some Chinese investors still use offshore platforms. But the government’s position remains clear. Any crypto activity that is not under state control is seen as a financial risk.
