China has replaced its landmark 2021 crypto ban with a new, more comprehensive regulatory framework that tightens oversight across the digital asset sector.
While the updated rules formally acknowledge real-world asset (RWA) tokenization for the first time, they do so within a narrowly defined, state-approved structure, while restrictions on all other crypto-related activities are expanded rather than relaxed.
The new circular, jointly issued by eight government ministries, repeals the 2021 notice but replaces it with a broader set of prohibitions. The ban now explicitly extends to RWA activities conducted outside state-approved channels, as well as to the provision of advertising or internet traffic to any unauthorised crypto service.
This may appear to be a relaxation of policy, but in practice it represents a strategic tightening of control. The new framework establishes a highly asymmetrical system.
Under the revised rules, a stricter ban applies to virtual currencies and unauthorised RWA activities. The absolute prohibition on cryptocurrency trading, exchange services and initial coin offerings (ICOs) is reaffirmed and expanded. Any RWA activity that does not receive explicit state approval is now also classified as illegal financial activity.
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At the same time, a narrow and tightly controlled channel is created for state-approved RWA. For the first time, the regulations allow RWA to exist legally, but only under two highly restrictive conditions. Domestic RWA must operate exclusively on “designated financial infrastructure”, such as state-owned data exchanges, effectively creating a walled garden under direct government supervision.
Cross-border RWA — including tokenised securities issued abroad using domestic Chinese assets — are now subject to a stringent China Securities Regulatory Commission (CSRC) filing regime, with extensive disclosure requirements and a “negative list” of prohibited asset types.
The filing regime referenced in the new framework is set out in CSRC Document No. 1 (2026), published on the regulator’s official website. The document outlines supervisory requirements for cross-border issuance of asset-backed security tokens backed by domestic assets.
Market Reaction Misreads the Signal
Initial market reaction included a rise in the shares of some Hong Kong–listed firms holding virtual asset licences, as investors interpreted the announcement as a broad opening for the RWA sector.
A closer reading of the regulations, however, suggests a different reality. The opportunity created by the new framework is not for a new class of broadly “compliant” crypto companies, but for a very limited number of entities willing and able to operate within China’s state-controlled financial infrastructure.
The rules also specify that financial institutions may provide services — such as custody and settlement — only to these pre-approved RWA projects, reinforcing the state’s role as the central gatekeeper.
Ultimately, this is a story of China selectively adopting the technology of tokenisation while maintaining firm opposition to the principles of open, permissionless crypto markets.
By constructing a narrow and tightly controlled pathway for RWA, Beijing is shaping its own version of a tokenised future — one in which the state, rather than the market, defines the boundaries of participation
