- RWA projects are treated as illegal fundraising, securities, or futures activities under existing law.
- Hong Kong-linked and offshore structures with mainland staff are explicitly targeted.
- Liability extends to the full Web3 service chain, not just token issuers.
China has issued one of its clearest statements yet on digital finance, formally declaring that tokenization of real-world assets (RWA) constitutes an illegal financial activity.
A coordinated notice from seven major financial industry associations places RWA tokenization in the same prohibited category as stablecoins, cryptocurrencies, and crypto mining.
The move removes remaining ambiguity about whether tokenized assets might be permitted under future regulatory pilots. Regulators drew a firm line that extends beyond project issuers to the entire Web3 service chain, explicitly covering Hong Kong-linked operations and offshore structures that employ mainland staff.
The declaration was jointly issued by the China Internet Finance Association, the China Banking Association, the China Securities Association, the China Asset Management Association, the China Futures Association, the China Association of Listed Companies, and the China Payment and Clearing Association.
Unified regulatory warning
The associations stated that RWA activities currently lack any legal basis under Chinese law.
They defined tokenization as financing and trading conducted through the issuance of tokens or token-like rights and debt instruments, a structure regulators say introduces layered risks related to fictitious assets, operational failures, and speculative trading.
Importantly, authorities emphasized that no Chinese regulator has approved any form of real-world asset tokenization, dismissing claims that projects are operating under trial programs or awaiting registration.
Legal observers described the announcement as a rare example of cross-industry coordination, typically used when regulators aim to contain systemic financial risk.
Legal breaches outlined
The notice mapped RWA activity to violations under China’s Criminal Law and Securities Law.
Issuing tokens to the public in a way that raises funds may be treated as illegal fundraising.
Facilitating token transactions or distributions without approval can amount to unauthorized public securities offerings.
Trading models that incorporate leverage or betting-like mechanisms can fall under illegal futures business operations.
Regulators also rejected claims that token structures can reliably guarantee ownership or enforce liquidation of underlying assets. Even when teams assert transparency or genuine collateral, authorities argue that risk spillovers remain uncontrollable.
Hong Kong and offshore routes
The warning specifically targets projects that attempt to circumvent mainland rules through overseas compliance narratives, asset anchoring claims, or exporting technology services.
China’s securities regulator has urged domestic brokerages to cease involvement in RWA tokenization activities in Hong Kong, effectively extending policy reach beyond the mainland.
A central element of the directive is the liability standard applied to service providers. Institutions and individuals who knew or should have known that they were supporting virtual currency or RWA-related business can be held accountable.
This objective standard undermines common Web3 models that rely on offshore registration while maintaining teams and operations in China.
Web3 service chain impact
Responsibility is not limited to project founders. Technology outsourcers, marketing agencies, influencers, payment interface providers, and operational staff all face legal exposure if they support RWA projects targeting Chinese users.
The notice states that even employing a single operations worker in China can expose an offshore project to enforcement risk.
Regulators linked the crackdown to a rise in frauds marketed under the RWA label, including schemes involving stablecoins, valueless tokens, and mining narratives used for illegal fundraising and pyramid activities.
The timing also coincides with China’s efforts to internationalize the digital yuan through a new Shanghai center for cross-border payments and blockchain services, while restricting private stablecoin issuance to preserve state control over currency issuance.