- RWA projects are now regarded as illegal fundraising, securities, or futures trading activities under existing law.
- Regulators explicitly target structures involving Hong Kong and offshore arrangements with mainland staff.
- Liability extends across the full Web3 service chain, not just token issuers.
China has issued one of its clearest signals yet on digital finance by formally classifying the tokenization of real-world assets (RWA) as an illegal financial activity.
A coordinated notice from seven major industry associations places RWA tokenization in the same prohibited category as stablecoins, cryptocurrencies, and crypto mining.
The move removes any remaining ambiguity about whether tokenized assets could develop under future pilot regulatory frameworks.
Instead, regulators drew a hard line that reaches beyond project issuers to the entire Web3 service chain, including Hong Kong–related operations and offshore structures that employ mainland personnel.
The joint declaration was 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 for Listed Companies, and the China Payment and Clearing Association.
Unified regulatory warning
The associations state that RWA activities lack a legal basis under current Chinese laws.
Tokenization is described as financing and trading through the issuance of tokens or token-like rights and debt instruments, a structure regulators say introduces layered risks tied to synthetic assets, operational failures, and speculative trading.
Crucially, the authorities emphasize that no Chinese regulator has approved any form of real-world asset tokenization, undermining claims that projects are in experimental phases or awaiting registration.
Legal observers describe the announcement as a rare example of cross-industry coordination typically reserved for moments when regulators seek to curb systemic financial risk.
Outlined legal violations
The notice maps RWA activities directly to violations under China’s Criminal Law and Securities Law.
Issuing tokens to the public while raising funds can be treated as illegal fundraising.
Facilitating transactions or distributing tokens without approval may constitute unlawful public offering of securities.
Trading models that use leverage or betting mechanisms could fall under illegal futures business operations.
Regulators also reject the premise that token structures can guarantee ownership or divestment of the underlying assets.
Even when teams claim transparency or genuine collateral, authorities maintain that the risk spillovers remain uncontrollable.
Hong Kong and offshore channels
The warning specifically targets projects trying to bypass mainland rules through foreign-compliance narratives, asset anchor claims, or exporting technology services.
China’s securities regulators urged domestic brokers to cease involvement in RWA tokenization activities in Hong Kong, effectively extending the policy’s reach beyond the mainland.
A key feature of the directive is the liability standard applied to service providers.
Institutions and individuals who know or should know they are supporting virtual currency or RWA-related businesses may be held accountable.
This objective standard affects common Web3 models that rely on offshore registration while keeping teams and operations in China.
Web3 service-chain consequences
Responsibility is not limited to project founders.
Tech outsourcers, marketing agencies, influencers, payment interface providers, and operations staff all face legal exposure if they support RWA projects aimed at Chinese users.
The notice warns that even hiring a single operations employee in China can expose an offshore project to enforcement risks.
Regulators link the crackdown to rising fraud under the RWA label, including schemes involving stablecoins, valueless tokens, and mining narratives used to facilitate illegal fundraising and pyramid activity.
The timing also aligns with China’s push to internationalize the digital yuan through a new Shanghai cross-border payments and blockchain service hub, while restricting private stablecoin issuance to preserve state control over currency issuance.