- RWA projects are treated as illegal fundraising, securities, or futures activities under existing law.
- Structures linked to Hong Kong and offshore entities with mainland staff are explicitly targeted.
- Liability extends across the entire Web3 service chain, not only to token issuers.
China has delivered one of the clearest signals yet about digital finance by officially classifying the tokenization of real-world assets (RWA) as 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.
This move removes remaining uncertainty over whether asset tokenization could proceed under future regulatory pilots.
Instead, authorities drew a hard line that reaches beyond project issuers to the full Web3 service chain, including operations tied to Hong Kong and offshore structures that rely on mainland staff.
The declaration was jointly issued by the China Internet Finance Association, China Banking Association, China Securities Association, Asset Management Association of China, China Futures Association, China Listed Companies Association, and China Payment and Clearing Association.
Unified regulatory warning
The associations stated that RWA activities lack legal basis under existing Chinese law.
Tokenization is defined as financing and trading through the issuance of tokens or token-like rights and debt instruments—structures that regulators say introduce layered risks tied to fictitious assets, operational failures, and speculative trading.
Crucially, authorities emphasized that no Chinese regulator has approved any form of real-world asset tokenization, rejecting claims that projects were operating under trial programs or awaiting registration.
Legal observers described the announcement as a rare example of cross-industry coordination, typically reserved for moments when regulators aim to contain systemic financial risk.
Outlined legal violations
The notice maps RWA activities directly to offenses under China’s criminal and securities laws.
Issuing tokens to the public as a way of raising funds can be treated as illegal fundraising.
Facilitating token transactions or distributions without approval may constitute an unauthorized public securities offering.
Trading models that involve leverage or betting mechanisms could fall under illegal futures business operations.
Regulators also rejected the premise that token structures can guarantee ownership or liquidation of underlying assets.
Even where teams claim transparency or underlying asset collateral, authorities argue that risk spillovers remain uncontrolled.
Hong Kong and offshore routes
The warning explicitly targets projects attempting to bypass mainland rules through offshore compliance narratives, claims of asset custodianship, or export of technology services.
China’s securities regulators urged domestic brokers to stop participating in RWA tokenization activities in Hong Kong, extending policy reach beyond the mainland.
A key feature of the guidance is the liability standard imposed on service providers.
Institutions and individuals who know—or reasonably should know—that they support virtual-currency businesses or RWA-related operations can be held accountable.
This objective standard undermines a common Web3 model that relies on offshore registration while keeping teams and operations in China.
Impact across the Web3 service chain
Liability 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 aimed at Chinese users.
The notice states that even employing a single operations staff member in China can expose an offshore project to enforcement risk.
Regulators linked the crackdown to rising frauds marketed as RWA, including schemes that use stablecoins, valueless tokens, and mining narratives to carry out illegal fundraising and pyramid activities.
The timing also aligns with China’s push to internationalize the digital yuan—through initiatives such as a new Shanghai cross-border payments hub and blockchain services—while limiting private stablecoin issuance to preserve state control over currency issuance.