China Bans Crypto and RWA Tokenization, Moves Digital Currency Oversight Under PBoC

Highlights:

• China has banned crypto and says all related trading and services are illegal under financial law.
• The central bank set January 1, 2026, as the start date for a new digital currency system after years of testing.
• Regulators also tightened rules for bank platforms and offshore companies.

Chinese regulators have issued a new joint notice that tightens restrictions on digital asset activity. The People’s Bank of China released the document alongside seven other government agencies. Authorities stated that virtual currencies do not carry legal tender status. Officials said these assets cannot circulate as currency within any market.

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🇨🇳 HUGE: China moved in lockstep to ban RWA tokenization, RMB stablecoins, and unapproved crypto trading, making anything non state-approved officially illegal. pic.twitter.com/QS6byOKPe9

— Nathan Jeffay (@NathanOnCrypto) February 6, 2026

The notice listed Bitcoin, Ether, and Tether as examples of prohibited virtual currencies. Regulators banned fiat-to-crypto exchange activity and crypto-to-crypto trading. They also outlawed market-making token issuance and information services tied to digital assets. Authorities warned that all related business activity now falls under illegal financial conduct.

The directive also applies to real-world asset tokenization. Regulators defined the practice as converting ownership or income rights into tradable tokens. Officials said such activity remains prohibited without explicit approval. Only designated financial infrastructure may support approved experiments.

Offshore platforms also face tighter limits. Regulators barred foreign entities from providing crypto or tokenization services to mainland users. Officials stressed that jurisdiction does not remove liability. Authorities said they will coordinate enforcement across borders when needed.

How China’s Ban on Crypto Cuts Across the Financial System

The notice expands restrictions across banks, payment firms, and financial institutions. Regulators banned account opening, fund transfers, settlements, custody, and insurance linked to virtual assets. Authorities ordered institutions to strengthen internal controls and transaction monitoring. Firms must also block indirect exposure through affiliates.

Internet platforms now face direct obligations. Regulators banned online venues marketing traffic buying and paid promotion tied to crypto services. Platforms must remove related content and close associated accounts. Authorities also required companies to assist with shutdowns of websites and applications.

At the same time, the central bank confirmed a clear policy timeline. The PBoC set January 1, 2026, as the start date for its updated digital currency framework. Officials released the action plan after nearly ten years of pilot programs. The central bank will provide technical support and direct supervision.

Authorities said the framework improves management clarity and operational efficiency. Officials described it as the approved route for digital finance activity. Regulators applied a same-business, same-risk, same-rules principle. This approach covers offshore structures controlled by domestic entities.

The notice also banned unapproved overseas issuance of yuan-linked stablecoins. Regulators cited risks tied to monetary sovereignty and cross-border capital flows. Officials warned that such products could enable fraud and money laundering. Authorities said these risks threaten financial security.

On Nov. 28, China’s central bank (PBOC) convened a coordination meeting and reiterated that: Virtual assets do not have the same legal status as fiat, are not legal tender, and must not be used as currency in market circulation; related business activities constitute illegal…

— Wu Blockchain (@WuBlockchain) November 29, 2025

Provinces Move to Shut Down Crypto Mining Operations

Regulators reinforced a crackdown on crypto mining activity in China alongside the ban. The government instructed provinces to locate and close down mining initiatives that were in place. They also prohibited any new mining capacity. Officials reported that the inspections will be conducted on a rolling basis.

The directive also narrows offshore structuring requirements. Regulators prohibited the use of foreign vehicles by domestic companies without consent. Regulators barred domestic firms from using overseas vehicles without approval. The notice became effective on release. The circular on virtual currency speculation issued in 2021 was also repealed by regulators. Authorities substituted it with a system that applies without an expiry date.

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