China is tightening its grip on cryptocurrency once again. On July 23, the People's Bank of China, together with seven other government agencies, released a revised joint notice explicitly prohibiting unauthorized offshore issuance of yuan-pegged stablecoins. For the first time, real-world asset (RWA) tokenization has been brought under regulatory oversight. The rules apply to both domestic and foreign entities, including overseas branches of Chinese firms.
The notice states that stablecoins pegged to fiat currencies "perform some of the functions of fiat currencies" and warns that their unregulated circulation could threaten the yuan's stability. Financial institutions are barred from offering banking or clearing services to crypto businesses. Mining operations remain subject to enforcement. Companies can no longer include terms like "stablecoin", "RWA", or "cryptocurrency" in their registered names or business scopes.
Stablecoins Under Direct Fire
The notice reaffirms that crypto has no legal tender status in China. All crypto-related business activities are classified as "illegal financial activities". The crackdown specifically targets offshore stablecoin issuance, especially those pegged to the yuan. Analysts view this as a move to close loopholes that allowed stablecoins to circulate through overseas platforms, thereby protecting the yuan's exchange rate and financial stability.
RWA Tokenization’s Grey Area Broken
Despite the tough language, the new rules create a seemingly regulated path for RWA tokenization, something that previously sat in a grey area. Louis Wan, CEO of Unified Labs, called it a milestone: "The biggest breakthrough is a clear separation between virtual currencies and RWA. Virtual currencies will still be outlawed, but RWA is being included in the regulatory system. For China's RWA business, this is a milestone."
Alex Zuo, senior vice president at Cobo, added: "To some extent, this means China is allowing the issuance of offshore tokens based on onshore assets." This opens a compliance channel for overseas investors to participate in China's RWA market, though detailed implementation rules are still pending.
Digital Yuan Dominance
Winston Ma, adjunct professor at NYU School of Law, noted that the central bank is essentially highlighting that only its own digital yuan is legitimate. The notice further reinforces the exclusion of private crypto alternatives. In parallel, China allowed commercial banks to pay interest on digital yuan wallets starting January 1, 2026, a clear push to drive e-CNY adoption while shutting out private options.
The crypto community reacted swiftly. Benjamin Cowen, CEO of Into The Cryptoverse, summed up the sentiment on X: "It wouldn't be a bear market if China wasn't banning crypto." The remark underscores the market's long-standing familiarity with China's consistent regulatory stance.
Overall, the new rules maintain a heavy clampdown on crypto activities while opening a narrow, regulated lane for RWA tokenization—signaling Beijing’s attempt to balance financial innovation with control. The push for the digital yuan further cements its monopoly in the digital currency realm.