China Escalates Crypto Crackdown, Targets Stablecoins and RWA Tokenization

China has significantly expanded its crypto enforcement framework after eight major national agencies issued a joint notice on February 6, intensifying restrictions on stablecoins and real-world asset (RWA) tokenization.

The move represents Beijing’s most aggressive regulatory escalation since the sweeping 2021 ban on crypto mining and trading.

Led by the People’s Bank of China and the China Securities Regulatory Commission, the directive signals a coordinated effort to close remaining loopholes that regulators say continue to enable speculative activity and financial risk.

Regulators Move to Shut Down RWA Tokenization

A central focus of the new notice is the outright prohibition of real-world asset tokenization. Chinese authorities explicitly banned the practice of converting physical assets—such as real estate, commodities, or equities, into blockchain-based tokens.

Regulators characterized RWA tokenization as a form of illegal public fundraising, warning that it obscures risk, facilitates unregulated capital raising, and threatens financial stability. The language marks a clear rejection of tokenization models increasingly adopted by global financial institutions outside China.

Stablecoins Singled Out as a Systemic Risk

The directive also takes direct aim at stablecoins, warning against their creation, circulation, or use in payments. Authorities reiterated that only the digital yuan, China’s central bank digital currency, is legally permitted for digital transactions within the country.

According to the notice, stablecoins pose heightened risks related to speculative behavior and capital flight. By reinforcing the exclusive role of the e-CNY, regulators appear intent on preventing parallel digital payment systems from gaining traction alongside state-controlled infrastructure.

An Unusually Broad Regulatory Coalition

The impact of the announcement is amplified by the scope of agencies involved, reflecting a unified stance across China’s financial, legal, and technological apparatus. In addition to the PBOC and CSRC, the notice was jointly issued by:

• Cyberspace Administration of China
• Ministry of Public Security
• State Administration for Market Regulation
• National Financial Regulatory Administration
• Ministry of Industry and Information Technology
• Supreme People’s Court

The breadth of participation underscores that the policy is not limited to financial supervision, but extends into cybersecurity, criminal enforcement, industrial policy, and judicial interpretation.

Risk Prevention Takes Priority Over Innovation

In framing the update, the PBOC emphasized “risk prevention” as the guiding principle. Regulators pointed to repeated speculative episodes and the potential for unmonitored cross-border capital flows as justification for the tighter stance.

By extending enforcement to RWA tokenization and stablecoins, authorities appear determined to preemptively block areas of crypto innovation that could otherwise re-emerge under institutional or quasi-compliant structures.

Global Markets React Amid Existing Stress

The announcement hit global markets during Asian trading hours, compounding already fragile sentiment following a sharp downturn in U.S. markets and a Bitcoin flash crash toward $60,000.

Tokens associated with real-world asset narratives, including Ondo, Mantra, and Pendle, experienced heightened volatility as traders reassessed the implications of losing access to potential Chinese institutional participation.

What the Move Signals

China’s latest action clarifies that its crypto stance is no longer limited to retail trading or mining activity. By explicitly targeting stablecoins and asset tokenization, regulators are signaling that any blockchain-based financial abstraction outside state control remains unacceptable.

For global markets, the message is less about immediate price impact and more about structural fragmentation. As tokenization and stablecoin adoption accelerate elsewhere, China is drawing a firm boundary, prioritizing monetary control and financial stability over participation in the evolving digital asset landscape.

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