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Seven major Chinese financial industry associations have jointly declared the tokenization of real-world assets illegal, categorizing RWA projects alongside cryptocurrency mining and stablecoins as prohibited financial activities and threatening liability for service providers and partners operating in the space.
According to the notice, the China Internet Finance Association, China Banking Association, China Securities Association, China Asset Management Association, China Futures Association, China Association of Listed Companies, and China Payment and Clearing Association warned that Bitcoin RWA tokenization has no legal basis for operation.
The associations grouped Bitcoin RWA tokenization with stablecoins, cryptocurrencies, and crypto mining as core forms of illegal virtual currency activity.
Rather than treating tokenized assets as emerging financial tools awaiting regulatory clarity, authorities characterized Bitcoin RWA tokenization as a high risk activity prone to fraud, speculation, and systemic spillover. Attorney Liu Honglin described the move as rare cross industry coordination typically reserved for moments of elevated financial risk.
The notice defined real world asset tokenization as financing or trading conducted through the issuance of tokens or token like debt and equity instruments warning that Bitcoin RWA tokenization carries risks including fictitious assets, project failure, and speculative excess.
Regulators stressed that no Chinese authority has approved any Bitcoin RWA tokenization activity removing any claim that projects are operating in pilot or exploratory phases.
Officials outlined three key legal violations tied to Bitcoin RWA tokenization under existing Criminal Law and Securities Law. Public token issuance used to raise funds may constitute illegal fundraising as unauthorized token distribution may qualify as illegal securities offerings and leveraged or betting style token trading could be deemed illegal futures activity.
The document added that Bitcoin RWA tokenization structures cannot legally guarantee ownership or liquidation of underlying assets, even when teams claim asset authenticity or technical transparency. Regulators concluded that risk spillover remains uncontrollable regardless of project design.
Enforcement extends beyond founders. Authorities warned that staff, service providers, and partners who “knew or should have known” they were supporting Bitcoin RWA tokenization could face liability, undermining the common Web3 model of offshore registration paired with mainland operations. Technology vendors, marketers, influencers, and payment providers were all cited as potentially accountable.
The directive effectively dismantles the domestic service chain supporting Bitcoin RWA tokenization as even a single China based employee could expose offshore projects to enforcement risk. The crackdown follows rising fraud cases using RWA branding for illegal fundraising and pyramid schemes.
The timing aligns with China’s efforts to internationalize the digital yuan through a new Shanghai operations hub while simultaneously blocking private stablecoin issuance to preserve state control over currency issuance.
