Seven powerful Chinese financial industry associations—including 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—issued a joint notice declaring real-world asset (RWA) tokenization an illegal financial activity. The statement directly blocks domestic institutions from engaging in RWA via Hong Kong or offshore structures, described by attorney Liu Honglin as a cross-industry, cross-regulatory “unified messaging” operation.
Joint Declaration: RWA Listed Alongside Crypto as Illegal
The notice classifies RWA tokenization alongside stablecoins, cryptocurrencies, and mining as primary manifestations of illegal virtual currency activities, stressing that such projects lack legal basis under Chinese law. Liu noted that multi-association coordination typically occurs only during critical moments of systemic financial risk prevention, implying regulators see RWA risks as reaching a tipping point.
The definition of RWA tokenization covers “financing and trading activities through the issuance of tokens or other rights and debt instruments with token characteristics,” citing risks of fictitious assets, business failure, and speculation. Regulators emphasized that Chinese financial authorities have not approved any RWA tokenization, eliminating the possibility for projects to claim a “regulatory exploration phase” or pending registration.
‘Know or Should Have Known’ Standard Destroys Offshore Compliance Narratives
The most stringent part is the extension of liability. Targeting common practices of offshore projects using mainland staff or service providers, the notice adopts a “know or should have known” standard: domestic employees of overseas virtual currency or RWA service providers, along with domestic institutions and individuals who knowingly or constructively provide services, will be held legally accountable.
Liu explained this standard replaces subjective intent with objective reasonable judgment, meaning teams claiming purely “technology service” or “infrastructure support” cannot escape culpability. Project planners, tech outsourcing vendors, marketing agents, influencer promoters, and payment interface providers all face potential legal consequences if they serve RWA projects targeting Chinese users. The notice explicitly states that even hiring a single operations person in China could expose ostensibly offshore projects to legal risks.
Hong Kong Web3 Service Chain Faces Sweeping Clearance
China’s securities regulator has urged domestic brokerages to halt RWA tokenization operations in Hong Kong. The directive directly covers the entire Web3 service ecosystem supporting RWA, including RWA anchoring, overseas compliance paths, and technology service output narratives. This means the domestic service chain—from technical architecture to marketing—loses viable business models alongside the prohibition on primary operations.
The crackdown aligns with Beijing’s push to internationalize the digital yuan through a new Shanghai operations center focused on cross-border payments and blockchain services, while simultaneously blocking major tech firms Ant Group and JD.com from issuing stablecoins in Hong Kong. Analysts say it aims to maintain the state’s monopoly on currency issuance, taking a zero-tolerance approach toward alternative asset tokenization like RWA.
The notice also cited frequent fraudulent activities under RWA branding, noting criminals exploit the concept for illegal fundraising and pyramid schemes using stablecoins, worthless coins (e.g., Pi coin), RWA tokens, and mining as covers. This contrasts sharply with Singapore’s leadership in RWA adoption, as China chooses a diametrically opposite regulatory path.