Author: Spinach Spinach Talks RWA
February 6, 2026, a day worth remembering.
Today, the People's Bank of China, together with eight other departments including the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the State Financial Regulatory Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange, issued the "Notice on Further Preventing and Handling Risks Related to Virtual Currencies" (Yinfa [2026] No. 42). At the same time, a more practical annex—the "Regulatory Guidelines on the Issuance of Asset-Backed Securities Tokens Overseas by Domestic Assets"—was also released.
This is not a simple "ban". If you still think that "China is going to ban crypto again", then you may have completely misunderstood this document.
Let me break down these two documents in plain language.
In 2021, eight ministries issued a similar document—Yinfa [2021] No. 237, commonly known in the industry as the "924 Notice." That document laid the foundation for China's "comprehensive containment" of virtual currencies. Five years later, Document No. 42 explicitly states in its final clause: "The 'Notice on Further Preventing and Handling Risks of Virtual Currency Trading and Speculation' (Yinfa [2021] No. 237) issued by the People's Bank of China and ten other departments is hereby repealed."
The move to replace the old with the new indicates that this is not a simple patching, but a systemic restructuring of the rules. So, what is the biggest difference between the new and old files?
One word: RWA.
The September 24th Notice of 2021 revolved entirely around virtual currencies, and at that time, the concept of "Real-World Asset Tokenization" was almost non-existent in the domestic regulatory context. However, Document No. 42 devoted a large portion of its content to defining and regulating "Real-World Asset Tokenization" (RWA), which in itself was a huge signal—the regulators officially recognized the existence of RWA as a business model and decided to set the rules for it, rather than rejecting it outright.
Key Point 1: The stance on virtual currencies remains unchanged, but the wording is more precise.
Article 1, Paragraph 1 of Document No. 42 states clearly: "Virtual currencies do not have the same legal status as legal tender." Bitcoin, Ethereum, USDT, and others are specifically named and defined as "not having legal tender status and should not and cannot be used as currency in the market."
The subsequent wording is almost identical to the 924 notice: All domestic activities involving the exchange of fiat currency for virtual currency, the exchange of virtual currencies among themselves, the provision of transaction intermediaries and pricing services, and token issuance financing are "strictly prohibited and resolutely banned according to law." The provision of virtual currency services by overseas entities to the domestic market is also prohibited.
However, there is an important new statement here: "Without the consent of relevant departments in accordance with laws and regulations, no entity or individual, whether domestic or foreign, may issue stablecoins pegged to the RMB overseas." Note that the document uses "without consent," not "absolutely prohibited." What does this mean? Theoretically, if "with the consent of relevant departments in accordance with laws and regulations," there is a possibility that RMB stablecoins could have a compliant path. This loophole is small, but it does exist.
For cryptocurrency investors, frankly, there's nothing new here. What needs to be banned remains banned, and what needs to be cracked down on remains cracked down on. Mining continues to be regulated, advertising continues to be blocked, and even company registration names and business scopes are prohibited from including terms like "virtual currency," "cryptocurrency," and "stablecoin."
Key Point Two: The definition of RWA was included in a ministerial-level document for the first time.
This is the most noteworthy part of Document No. 42. The second paragraph of the first article of the document provides a very clear official definition:
"Real-world asset tokenization refers to the activity of using cryptographic technology and distributed ledger or similar technologies to convert the ownership and income rights of assets into tokens or other rights or debt certificates with token characteristics, and then issuing and trading them."
This definition has several layers of meaning worth analyzing. First, it limits the technical means of RWA to "cryptographic technology and distributed ledger or similar technology"—that is, blockchain or blockchain-like technology is a necessary condition for RWA. Second, the objects of tokenization are "ownership, income rights, etc.," covering a wide range, from real estate to accounts receivable, from bonds to fund shares, theoretically all within its scope. Finally, both the "issuance and trading" stages are brought under regulatory purview.
However, the real key lies in the next sentence:
"Except for relevant business activities conducted based on specific financial infrastructure with the approval of the competent business authority in accordance with laws and regulations."
In simpler terms: RWA isn't entirely prohibited within China, but you need approval and must operate on a regulatory-approved financial infrastructure. The phrase "specific financial infrastructure" is quite intriguing. What constitutes "specific financial infrastructure"? The document doesn't explicitly list it, but based on current practices in China, the Shanghai Data Exchange, Beijing International Big Data Exchange, Shenzhen Data Exchange, local financial asset exchanges, and the digital RMB infrastructure led by the People's Bank of China are all potential candidates.
In other words, the logic of Circular 42 is not "banning RWA", but rather "RWA must be played in my territory".
Key Point 3: Tokenization of Domestic Assets Going Global – A Formal Regulatory Framework Now Exists
Chapter 4 of Document No. 42, "Strict Supervision of Domestic Entities Conducting Related Business Overseas," is the most groundbreaking part of the entire document. It doesn't say "Going overseas is prohibited," but rather "Going overseas is allowed, but you must abide by the rules."
Article 14 of the document distinguishes several situations: RWAs (Responsible Weapons) issued overseas by domestic entities in the form of foreign debt are regulated by the National Development and Reform Commission (NDRC) and the State Administration of Foreign Exchange (SAFE); RWAs based on domestic equity and issued overseas in the form of asset securitization or equity are regulated by the China Securities Regulatory Commission (CSRC); other forms of RWAs are also regulated by the CSRC in conjunction with relevant departments. The core principle is "same business, same risk, same rules"—regardless of whether it is issued in Hong Kong or Singapore, as long as the underlying assets are located in China, Chinese regulation must keep pace.
What does this mean? The biggest obstacle for Chinese assets to go global through RWA tokenization has never been technology or the market, but rather the regulatory gray area. Many projects want to do it, but no one dares—because there are no clear rules; doing so could be legal or illegal. Document No. 42 finally clarifies the rules: you can do it, but you must obtain approval or register.
The accompanying "Regulatory Guidelines on the Issuance of Asset-Backed Securities Tokens by Domestic Assets Overseas" (hereinafter referred to as the "Guidelines") provides more specific guidance on "how to do it".
Key Point Four: CSRC Filing System – Asset Securitization Tokens Now Have a Specific Path
The "Guidelines" are the most practical document this time, as they specifically set up filing rules for the scenario of "issuing asset-backed securities tokens overseas with domestic assets".
The core process of the "Guidelines" can be summarized as follows: The domestic entity that actually controls the underlying assets files a record with the China Securities Regulatory Commission (CSRC), submitting a record report, a complete set of overseas issuance documents, and other materials, fully explaining the information of the domestic entity, the underlying assets, and the token issuance plan. If the materials are complete and compliant, the CSRC will complete the record-filing process and make it public; otherwise, the record will not be filed.
Please note that the term used here is "filing," not "approval." Although the China Securities Regulatory Commission (CSRC) may "solicite opinions from relevant departments of the State Council and industry regulatory agencies as appropriate," the overall system is designed as a filing system, which is much more lenient than an approval system. This indicates that the regulatory authorities' attitude towards domestic assets going overseas to conduct asset securitization and tokenization is cautiously open—not giving you the green light, but not sealing the door either.
The guidelines also set up a clear negative list: assets that are prohibited from financing by law are not allowed, assets that endanger national security are not allowed, assets whose controllers have criminal records are not allowed, assets that are under investigation are not allowed, assets with major ownership disputes are not allowed, and assets prohibited in the negative list for domestic asset securitization are also not allowed.
These restrictions are highly consistent with the existing regulatory logic for domestic asset securitization and overseas listing of companies—the regulators have clearly incorporated RWA tokenization into the existing securities regulatory framework, rather than starting from scratch.
Key Point Five: The role of financial institutions is strictly defined.
Article 6 of Document No. 42 makes the requirements for financial institutions very clear: for virtual currency-related businesses, they shall not provide services such as account opening, fund transfer, clearing and settlement; however, for RWA businesses, the restriction condition is "without consent" - that is to say, if it is a compliant RWA business that has been filed and approved, financial institutions are allowed to provide custody, clearing and settlement services.
This point has undeniable significance for the entire industry. For RWA projects to grow and thrive, the participation of traditional financial institutions is indispensable—custodian banks, clearinghouses, and payment channels are all infrastructure-level entities. Document 42 removes the negative label of "compliant RWA" from the term "virtual currency," clearing policy obstacles for financial institutions to participate in RWA business.
Article 15 of the document further stipulates that overseas subsidiaries and branches of domestic financial institutions must provide RWA services "in accordance with the law and with prudence," and must be equipped with professional personnel and systems, implement KYC, suitability management, anti-money laundering and other requirements, and be incorporated into the compliance and risk control management system of domestic financial institutions. This is equivalent to telling the overseas branches of Chinese-funded institutions: you can do this business, but you must be included in the unified management of the group and do not engage in "regulatory arbitrage" overseas.
How should we interpret the overall message conveyed by these two documents?
If you look at Document No. 42 and the "Guidelines" together, you will find a very clear regulatory logic:
First, cryptocurrencies and RWA have been clearly separated. The crackdown on cryptocurrencies continues unabated since 2017. However, RWA is no longer broadly categorized as "cryptocurrency-related business," but is treated as a form of financial business that can exist within the regulatory framework.
Second, RWAs within China operate under a "franchise" model. RWAs conducted within China must be carried out on "specific financial infrastructure" approved by regulators; any activity conducted without a license or permit is considered illegal. This aligns with China's consistent regulatory approach to financial businesses—finance is a franchised industry.
Third, the tokenization of domestic assets going global adopts a registration system. This is the biggest piece of new information. It provides a compliant path for high-quality assets in China to enter global capital markets through RWA (Real Asset Transaction) mechanisms. The China Securities Regulatory Commission (CSRC), as the main regulator, uses registration rather than approval, making the threshold relatively reasonable.
Fourth, financial institutions have received explicit permission to participate in compliant RWA operations. This provides the institutional foundation for building the entire ecosystem. Without the participation of banks and clearing institutions, RWA is merely a castle in the air.
From a broader perspective, the issuance of Document No. 42 and the Guidelines marks a formal transition in China's regulation of crypto assets from a "one-size-fits-all" approach to "categorized regulation." While the crackdown on virtual currencies continues, RWAs—especially those backed by real assets, with compliant structures, and regulatory filings—are being separated from the targets of this crackdown and incorporated into the formal financial regulatory system.
This is not China embracing crypto, but China embracing tokenization in its own way.
For institutional investors and project teams who have been observing from the sidelines, the rules of the game are finally clear. The compliance path is there, the negative list is there, the regulatory bodies are there, and the filing process is there. The remaining question is—are you ready?
