China's RWA Regulatory Framework Officially Released: Interpretations and Outlook

Tokenization of real-world assets (RWA) involving onshore Chinese assets and offshore issuance is no longer operating in a regulatory gray zone.

On February 6, 2026, eight Chinese authorities — including the People’s Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, National Financial Regulatory Administration, China Securities Regulatory Commission, and State Administration of Foreign Exchange — jointly issued the Notice on Further Preventing and Handling Risks Related to Virtual Currencies and Other Activities (the “Notice”). At the same time, the China Securities Regulatory Commission released its 2026 Announcement №1, the Regulatory Guidelines on Offshore Issuance of Asset-Backed Tokenized Securities Based on Onshore Assets (the “Guidelines”).

According to Caixin, compared with the window guidance issued in late August 2025 that effectively prohibited domestic enterprises from pursuing offshore RWA activities, regulators have now formally defined RWA for the first time and provided a clear supervisory framework.

Liu Yang (Zhongben Law) noted that the Notice explicitly states it takes effect on the date of issuance and simultaneously repeals the 2021 “924 Notice.” In his view, this marks the first time China’s virtual-asset regulatory regime has been reconstructed through a “repeal and replace” approach.

Crypto commentator Bocai Bocai emphasized that this is not simply another crypto ban, but rather a systemic restructuring of rules: regulators have formally acknowledged RWA as a business category and begun delineating its operational boundaries.

RWA Formally Defined for the First Time, with a “Compliance Exception” for Onshore Activities

The Notice provides China’s first official definition of RWA: activities that use cryptographic and distributed-ledger technologies (or similar technologies) to convert asset ownership rights, income rights, or other interests into tokens or token-like claims, and issue and trade such instruments.

It further clarifies that conducting RWA and related intermediary or IT services domestically is, in principle, classified as illegal financial activity — except where such activities are approved by competent authorities and conducted on designated financial infrastructure.

Analyst “Shisi Jun” pointed out that when read together, the Notice and the Guidelines signal a regulatory separation of RWA from traditional virtual-currency frameworks. For the first time, regulators introduced a compliance pathway based on “regulatory approval + designated financial infrastructure,” meaning RWA is formally recognized as a regulated business form rather than being automatically subject to blanket crypto restrictions.

Will Awang (Web3 legal practitioner) added that the Notice explicitly differentiates virtual currencies, stablecoins, and RWA, forming a layered supervisory model of “blanket prohibition + dynamic assessment + licensed operation,” indicating that China’s virtual-asset regulatory architecture has begun to take shape.

Will Awang described this framework as “same business, same risk, same regulation,” meaning RWA is not governed under a parallel system but mapped directly onto existing cross-border financial supervision based on its economic substance.

Clear Division of Responsibilities Among NDRC, CSRC, and SAFE; Stablecoins May Raise FX Classification Risks

Under the Notice, external-debt RWA falls under NDRC oversight; equity and securitization RWA are supervised by the CSRC; repatriation of offshore funds is regulated by SAFE; and other RWA forms are jointly supervised by the CSRC and relevant authorities.

The Notice also states that fiat-pegged stablecoins “effectively perform certain functions of legal tender in circulation.”

Liu Yang warned that this language could be extended in judicial practice to classify fiat–stablecoin exchange as “disguised foreign-exchange trading,” potentially increasing legal risks for OTC markets and cross-border conversions. He emphasized that the key uncertainty lies in future enforcement interpretation.

Will Awang noted that repeated references to “without approval from competent authorities” reflect a principle of dynamic regulatory assessment, leaving room for future compliant operations.

Asset-Backed RWA Takes the Lead, with CSRC Clarifying Filing Procedures

The Guidelines specifically address the third category: offshore issuance of tokenized asset-backed securities based on onshore assets.

These are defined as tokenized claims issued offshore using cryptographic and distributed-ledger technologies, supported by cash flows generated from onshore assets or related rights.

The Guidelines also establish a negative list, covering national security concerns, criminal records, ownership disputes, and other prohibited circumstances.

Shisi Jun noted that by standardizing “filing + offshore documentation + token design disclosures,” RWA has moved from principle into operational reality.

Veteran crypto lawyer Jin Jianzhi stated that once the CSRC clarified filing and documentation requirements, compliance costs rose significantly, making it more likely that large financial or industrial players — rather than typical Web3 startups — will drive RWA adoption.

Offshore RWA Services Brought Under Unified Risk Controls for Financial Institutions

Article 15 of the Notice requires offshore subsidiaries and branches of Chinese financial institutions providing RWA services to implement KYC, suitability management, and AML controls, and to integrate these activities into domestic unified risk-management frameworks.

Liu Yang emphasized that the compliance channel for offshore RWA is primarily reserved for financial institutions, stating plainly: “this opening is meant for the financial system.”

Lawyers Warn: RWA Resembles Security Tokenization; Onshore Fundraising Risks Are Rising

Attorney Liu Honglin argued that the regulatory framing effectively treats RWA as “security tokenization.” By prioritizing RWA from a financial-risk perspective, regulators aim to block fundraising channels that use NFTs, digital collectibles, or RWA as pretexts to tap mainland assets, capital, or retail investors.

He explicitly advised caution regarding RWA consulting, issuance, promotion, or sales within mainland China, and warned that legal risks tied to OTC trading, cross-border funds, and KOL-driven traffic acquisition have risen substantially.

On-Chain Deployment Faces Practical Constraints: Fragmented Token Standards and Wallet Compatibility

Shisi Jun further noted that even with regulatory pathways becoming clearer, real on-chain RWA deployment still faces material technical and ecosystem constraints. Globally, RWA token standards remain fragmented.

He cited Aave’s aToken and Lido’s stETH as examples, arguing that market adoption did not stem from perfect standards, but from embedding yield directly into on-chain interactions, allowing transfers and staking to automatically reflect accrued returns.

By contrast, certain bond-token standards such as ERC-3525 and ERC-3475 suffer from complex design and high wallet-integration costs, limiting real-world adoption.

In equity-style RWA, current implementations often rely on “on-chain shares + multiplier scaling” via rebasing mechanisms, but inconsistent wallet support can still lead to discrepancies in user-side asset displays.

Shisi Jun concluded that RWA’s core challenge is not merely regulatory approval, but whether existing on-chain infrastructure can support stable yield representation, composability, and a complete user-experience loop.

Conclusion

Across multiple interpretations, the 42 Notice and accompanying Guidelines do not represent a loosening toward crypto, but a clear structural realignment: virtual currencies remain excluded from the financial system, stablecoins enter a dynamic assessment regime, and RWA is formally incorporated into traditional securities and cross-border financing frameworks.

This is not China embracing crypto — it is China integrating “tokenization” on its own financial-institutional terms.

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