The market's so-called "strictest-ever" regulatory framework for the virtual currency sector has recently been formally implemented. On February 6, the People's Bank of China, in conjunction with eight other government departments, issued a "Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies" (hereinafter referred to as the "Notice"). This document reiterates that business activities related to virtual currencies constitute illegal financial activities. For the first time, it explicitly states that no entity or individual is permitted to issue offshore stablecoins pegged to the Renminbi.

Simultaneously, the China Securities Regulatory Commission (CSRC) released a practical annex titled "Regulatory Guidelines on the Offshore Issuance of Asset-Backed Security Tokens by Domestic Assets" (hereinafter referred to as the "Guidelines"). This marks the first official definition of Real World Asset (RWA) tokenization and establishes a regulatory principle of "strict prohibition domestically, stringent regulation offshore."

The coordinated effort by the eight departments aims to comprehensively curb illegal financial activities, forming a strict control mechanism covering the entire virtual currency chain.

The ban on issuing offshore Renminbi-pegged stablecoins directly targets the source of illegal issuance by domestic institutions. This will impact the entire industry chain of these stablecoins, including issuance, circulation, and trading. The current state of the stablecoin market includes some offshore Renminbi-pegged stablecoins, some of which lack proper licensing, have opaque fund management, and may facilitate cross-border capital flows into the domestic market, potentially acting as vehicles for illicit cross-border fund transfers. This poses risks to China's monetary circulation order and foreign exchange management. Subsequently, the channels for these currencies to penetrate the domestic market will be severed.

Against the backdrop of these new regulations imposing strict oversight on domestic entities engaging in virtual currency businesses offshore and clearly defining prohibited activities, it is believed that the reaffirmation of regulatory stance means major mainland enterprises will likely continue to be cautious. Large technology giants may refrain from applying for stablecoin licenses in the future.

However, it is also noted that while overseas holding companies of mainland enterprises are prohibited from issuing virtual currencies, the possibility of their partner companies participating in stablecoin issuance remains open for discussion and is not entirely ruled out. Furthermore, the prohibition on direct issuance does not prevent overseas holding companies from participating in Web3.0 infrastructure development and technology enablement services.

Regarding the latest progress on Hong Kong's stablecoin licensing, the Hong Kong Monetary Authority (HKMA) has received 36 applications for stablecoin issuer licenses, which are currently under assessment. The HKMA aims to issue the first batch of licenses by March, with only a small number to be granted initially. The HKMA Chief emphasized that stablecoin development must be prudent, with a key focus during assessment being the applicant's risk management capabilities. Under Hong Kong's framework, stablecoin operators engaging in cross-border activities must comply with local regulations in jurisdictions such as the Chinese mainland, Singapore, London, and ASEAN countries.

In recent years, as the RWA concept gained traction, related speculative activities have emerged. The latest regulatory intervention clarifies the approach of "strict prohibition domestically, stringent regulation offshore." The "Guidelines" also establish a clear regulatory framework for the offshore issuance of RWA tokens backed by domestic assets.

The "Notice" provides the first explicit definition of RWA tokenization: activities that use encryption technology and distributed ledger or similar technologies to convert asset ownership, income rights, etc., into tokens or other equity/debt instruments with token-like characteristics, for the purpose of issuance and trading.

Issuing RWA tokens domestically is explicitly prohibited. According to the "Notice," domestic RWA activities, including providing related intermediary or IT services, are considered illegal financial activities such as the unauthorized issuance of token certificates, illegal public securities offerings, unauthorized securities and futures business operations, and illegal fundraising, and should be banned.

Offshore RWA activities by domestic entities also face stringent regulation. The "Notice" categorizes these activities: for instance, offshore RWA tokenization businesses conducted by domestic entities directly or indirectly, resembling foreign debt issuance, or those based on domestic asset ownership/income rights resembling asset securitization or equity-like tokenization offshore, will be regulated by bodies like the National Development and Reform Commission, CSRC, and State Administration of Foreign Exchange under the principle of "same business, same risk, same rules."

A "filing system" is the core mechanism introduced by the "Guidelines." The CSRC will strictly supervise the offshore issuance of RWA tokenized products backed by domestic assets. Before conducting such business, the domestic entity that actually controls the underlying assets must file with the CSRC, submitting a filing report, full offshore issuance documents, and details about the domestic filing entity, underlying assets, and token issuance plan. Applications not meeting requirements will be rejected.

Analyses suggest that for China's nascent RWA sector, the "Guidelines" are landmark. In the short term, projects attempting regulatory arbitrage, those with poor qualifications, or compliance risks may be forced out, potentially dampening market activity temporarily. However, clear rules provide direction for willing and capable institutions, avoiding the extreme risk of a blanket policy crackdown.

It is observed that the regulations leave some room for compliant RWA models, aiming to balance financial innovation with strict oversight. This prevents domestic assets from achieving regulatory arbitrage through offshore tokenization while guiding RWA development within a legal framework. Importantly, the filing requirements cover core information like underlying assets and issuance plans, necessitating that enterprises ensure asset legitimacy and that token issuance adheres to the essence of asset-backed securities.

Authorities have consistently maintained a prohibitive policy stance towards virtual currency-related business activities. Recent policies not only clarify regulatory focus and legal responsibilities but also accelerate the establishment of a long-term regulatory system characterized by central coordination, local implementation, departmental collaboration, and multi-level linkage.

For example, in enforcement, financial regulators focus on supervising financial and payment institutions to cut off channels for illegal virtual currency fund flows; public security authorities maintain high pressure against related crimes; market regulators strictly manage business registrations and advertisement releases, cracking down on illegal advertisements.

Expert commentary suggests the upgraded virtual currency regulatory system core objective is safeguarding financial sovereignty and security. By explicitly banning virtual currency circulation and strictly controlling stablecoin issuance—especially those pegged to the Renminbi—it firmly defends the Renminbi's status as the legal tender and national monetary sovereignty.

The regulatory upgrade also delineates a clear "safety zone" for fintech innovation. The policy does not reject technologies like blockchain outright but strictly prohibits activities that could become sources of systemic risk. Simultaneously, it reserves space for compliant, controlled innovation through mechanisms like "approval reliant on specific financial infrastructure" and "filing management." This guides technology to serve the real economy rather than speculation. Furthermore, bringing RWA activities into the financial regulatory framework helps prevent them from becoming channels for capital flight, money laundering, or illegal fundraising, thereby safeguarding national economic and financial stability. China's clear regulatory stance and governance practices in the digital asset field also offer Chinese solutions and perspectives for global digital financial risk prevention.