China has rolled out its most comprehensive regulatory crackdown to date on real-world asset tokenization, formally labeling the activity as illicit and high risk. The scope of the action applies to all RWA-related projects with any form of connection to China, including overseas and offshore initiatives. Observers expect the move to significantly restrict crypto- and Bitcoin-linked RWA ventures and effectively signal the end of any remaining Web3 development tied to the Chinese market.
The decision was announced through a joint notice issued by seven major financial industry organizations. These included associations representing internet finance, banking, securities, asset management, futures, listed companies, and payment and clearing services. The coordinated nature of the release highlighted the seriousness of the regulatory stance and underscored broad institutional alignment.
RWA Tokenization Grouped With Crypto Activities
Under the new framework, RWA tokenization has been placed in the same regulatory category as cryptocurrencies, stablecoins, and crypto mining. Authorities characterized tokenization not as a legitimate financial innovation but as a channel that facilitates fraud, speculative behavior, and illegal fundraising. Regulators further clarified that existing Chinese law offers no legal foundation for operating or piloting RWA tokenization projects.
Legal experts have described the move as an uncommon example of cross-regulatory enforcement, noting that such unified action typically emerges when authorities perceive elevated systemic risk. Regulators defined RWA tokenization as financing and trading activities conducted through tokens or token-like representations of debt and equity, reinforcing the view that such structures fall squarely within prohibited financial conduct.
No Regulatory Gray Areas Remain
The notice emphasized that no Chinese regulatory authority has ever endorsed RWA-related activities. As a result, projects cannot rely on regulatory gray zones, experimental sandboxes, or pending approvals to justify operations. This clarification removes ambiguity that some market participants previously viewed as a window for limited compliance.
Authorities outlined three primary violation scenarios under existing law. These included illegal fundraising through token issuance, unlawful public securities offerings facilitated by trading platforms, and prohibited futures-style activities such as leveraged trading, prediction markets, and gambling-based token transactions. Each of these activities was identified as falling under criminal or securities law violations.
Ownership Claims and Offshore Routes Rejected
Regulators also rejected arguments suggesting that tokenization guarantees legal ownership or liquidation rights over underlying assets. This position applies even to projects that consider themselves compliant, as authorities stated that spillover and contagion risks cannot be effectively controlled.
China’s securities regulator has reportedly instructed domestic brokerages to halt RWA-related operations in Hong Kong, closing a frequently used channel for mainland-linked schemes. The notice specifically targeted attempts to bypass oversight through overseas compliance narratives, asset anchoring claims, or the framing of activities as technology services. Liability was extended to mainland-based staff and service providers supporting offshore RWA initiatives.
Expanded Liability Across the Service Chain
A key feature of the enforcement framework is the adoption of a standard based on whether parties knew or should have known about violations. This removes the burden of proving intent and broadens exposure for planners, developers, marketers, influencers, and payment providers. Even the involvement of a single operations staff member located in China could trigger enforcement action.
Legal analysts noted that advisory and consulting teams can no longer rely on exemptions tied to infrastructure or technology support. This change effectively dismantles protective buffers that previously insulated service providers from direct responsibility.
Strategic Contrast With Global Trends
The crackdown stands in sharp contrast to jurisdictions such as Singapore, which has emerged as a global leader in RWA adoption in 2025. In China, however, the restrictions align with broader policy objectives aimed at expanding the digital yuan while tightening oversight of cross-border capital movement.
The timing also coincides with the launch of a Shanghai-based international operations center for the digital yuan. At the same time, authorities have blocked major firms from issuing stablecoins in Hong Kong, reinforcing centralized control over currency issuance.
By eliminating both RWA projects and their supporting service networks, China has decisively shut down domestic crypto-linked tokenization efforts, reaffirming its commitment to state-controlled digital finance.
