Chinese regulators have broadened their crackdown on crypto activities, imposing strict oversight on tokenization and stablecoin issuance in a Friday notice.
"Recently, influenced by various factors, speculative activities related to virtual currencies and the tokenization of real-world assets have occurred frequently, posing new challenges and situations for risk prevention and control," said the notice, issued jointly by eight national organizations including the People’s Bank of China (PBOC) and the China Securities Regulatory Commission (CSRC).
The notice reiterates China’s blanket ban on crypto, saying that trading, issuing or facilitating transactions involving digital currencies such as bitcoin BTC$65,998.81, ether ETH$1,926.58, or stablecoins like Tether's USDT USDT$0.9991 is illegal.
The prohibition extends to foreign entities and individuals offering such services within China. It also bans domestic entities from issuing digital currencies overseas without regulatory approval.
The notice singles out stablecoins — cryptocurrencies pegged to fiat currencies — for special scrutiny. Authorities argue stablecoins replicate key functions of sovereign money and therefore threaten monetary control.
The new rules make clear that no entity, Chinese or foreign, may issue a stablecoin linked to the renminbi abroad without government approval. That includes overseas branches of domestic firms.
The rules also tighten control over tokenization, the fast-growing trend of turning ownership of real-world assets like equities, real estate or funds into digital tokens.
Chinese firms that want to tokenize assets overseas now must obtain approvals or file with regulators, and their financial and tech partners are required to meet heightened compliance standards, the notice said.
China's crackdown on cryptocurrencies and related activities have been a staple over the past years. The new set of rules build on Chinese authorities in 2021 deeming all crypto-related business activities illegal and prohibiting crypto mining, often called a "China ban." In 2017, authorities banned Initial Coin Offerings (ICOs), labeling them as illegal fundraising and financial fraud, and ordered domestic cryptocurrency exchanges to shutter fiat-to-crypto trading operations.
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