Several of the largest financial industry associations in China have reportedly signaled that the country’s regulators could crack down on Real-World Asset (RWA) tokenization.
According to a notice shared by Wu Blockchain on Monday, the Asset Management Association of China, National Internet Finance Association of China, the China Banking Association, the Securities Association of China, the China Futures Association, the China Association for Public Companies, and the China Payment Clearing Association will no longer consider RWAs as “new technology” subject to regulatory clarification but rather as a “risky” business model.
The association listed RWAs, stablecoins, ”air coins,” a term for tokens lacking real value, and mining as illegal activities related to cryptocurrencies.
“Real-world asset tokenization involves financing and trading activities carried out through the issuance of tokens or other rights or debt certificates with token-like characteristics,” said the associations, according to a translation provided by Wu Blockchain. “It carries multiple risks, including risks of fraudulent assets, operational failure, and speculative hype. At present, no real-world asset tokenization activities have been approved by China’s financial regulatory authorities.”
The policy change by the industry associations effectively defines involvement with RWAs as “financing and trading activity” prohibited under Chinese law, and putting them at risk of a regulatory crackdown. In October, the People’s Bank of China and another regulatory authority reportedly dissuaded technology giants in the country from pursuing their stablecoin plans, signaling concerns from Beijing.
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“[R]egulators’ message this time is unequivocal: this is not a technology issue, nor a mechanism issue — real-world financial risks overwhelmingly outweigh any technological benefit,” wrote Wu Blockchain. “The document contains no mention of ‘technical pilots,’ ‘tiered regulation,’ or ‘prudential development.’ This clearly shows that the regulatory goal is not to optimize RWA — it is to exclude it entirely from the legal landscape.”
Coinbase exec warns US could lose to China
With the passage of the GENIUS Act by the US government in July, regulators have been making inroads into setting up a federal framework for payments stablecoins in the country. However, banks pressuring lawmakers to address stablecoin rewards has reportedly come amid implementation of the law.
Coinbase chief policy officer Faryar Shirzad said in December that the debate over implementation of the law could weaken the US’ position as China competes for use of its digital yuan for global payments. Commercial banks in China were permitted to pay interest on balances held in digital yuan wallets starting on Thursday.
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