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China Targets RWA Tokenization in Harshest Crypto Warning Since 2021 Ban
China Imposes Sweeping Crypto Crackdown as RWA Tokenization Officially Banned – In a rare show of unified force, seven major Chinese financial industry associations have issued a sweeping risk warning that signals the country’s most extensive crypto crackdown since the landmark 2021 ban. The coalition—spanning banking, securities, funds, futures, payment clearing, listed companies, and internet finance—declared that all crypto-related business activities remain illegal in mainland China, explicitly adding stablecoins, airdrops, mining, and notably, real-world asset (RWA) tokenization to the prohibited list.
RWA Tokenization Becomes a New Regulatory Flashpoint
The Dec. 5 statement marks the first official prohibition of RWA tokenization, stressing that regulators have “not approved any real-world asset tokenization activities.” The last time such a broad coalition mobilized was in September 2021, when a multi-agency directive effectively expelled all crypto exchanges from China and crushed domestic mining, driving the nation’s share of Bitcoin hashrate down from 75%.
This latest move coincides with global RWA adoption surpassing $30 billion, driven by high-profile initiatives such as BlackRock’s $2 billion BUIDL fund. Chinese authorities, however, appear increasingly concerned that RWA tokenization could become a powerful channel for capital flight, enabling domestic assets to be converted into tokens and moved offshore beyond the reach of foreign exchange controls.
Multi-Agency Enforcement Tightens
The joint notice reiterates that virtual currencies, including stablecoins and tokens like Pi coin, lack legal status and cannot circulate in China. Issuing, exchanging, or raising funds via RWAs or virtual assets is banned—even when conducted by offshore companies employing mainland staff. The warning follows a late-November meeting where regulators classified stablecoins as virtual currencies subject to prosecution, amid a reported 37% year-on-year rise in virtual-asset-related money laundering.
Analysts describe the operation as a “four-layer blockade,” targeting mining, stablecoin channels, RWA pathways, and fraudulent schemes such as Pi Network. The statement also draws a hard line separating mainland policy from Hong Kong’s more crypto-friendly framework, where licensed exchanges and RWA pilots continue under tightly controlled conditions.
Youth Frustration Builds Online
The crackdown has sparked widespread debate among young Chinese investors, many of whom feel shut out of global crypto opportunities. Online discussions highlight growing frustration over the widening policy gap between China and Western jurisdictions, with critics warning that sweeping restrictions may curb innovation alongside illicit activity.
