On December 5, 2025, the China Internet Finance Association and six other major financial industry associations jointly issued a rare risk warning (on preventing risks related to illegal activities involving virtual currencies and others). This document, with unprecedentedly clear wording and a comprehensive ban, has drawn a non-crossable red line for all business activities involving virtual currencies and emerging 'real-world asset tokens' within the country.
This is not an isolated industry warning. Just a week ago, the People's Bank of China led a meeting with 13 departments participating in the 'Coordination Mechanism Meeting for Combating Speculation in Virtual Currency Trading,' which for the first time officially clarified that 'stablecoins are a form of virtual currency.'
Industry insiders generally believe that the mechanized deployment by central ministries to the simultaneous implementation by seven major industry associations marks China's regulation of virtual currencies has transitioned from specialized governance to a new stage of normalization and synthesis, with the regulatory network tightening with unprecedented density and strength.
This regulatory 'heavy punch' directly targets three core objectives:
First, completely clarify the illegal financial nature of virtual currencies and their variants;
Secondly, instruct all licensed financial institutions and internet platforms to completely sever any service connections to the virtual currency industry.
Third, amid the global digital asset concept craze, issue the strictest risk warnings to the public. Behind this is a deep national financial security logic aimed at maintaining monetary sovereignty, ensuring the stability of the financial system, and defending the system of capital project management.
I. Regulatory upgrade: from 'prohibited activities' to 'cutting off services'
The core of the joint reminder by the seven associations is to extend regulatory efforts from focusing on virtual currency trading itself to the entire financial and technical service ecosystem supporting its operations. The document proposes highly targeted prohibitions for various market participants.
● First, all types of financial institutions are required to act as 'walls of separation.' Banks and payment institutions are strictly prohibited from providing any accounts, clearing, settlement, or credit services for the issuance or trading of virtual currencies or real-world asset tokens, and it is explicitly stated that they must not provide any financial support for 'mining' activities. Securities, funds, futures, and other investment institutions are also required not to engage in financial products and services related to them. This means that the channels through which virtual currencies attempt to exchange legal currency and transfer funds through the traditional financial system have been effectively sealed off.
● Secondly, the marketing and technical services of internet platform enterprises are strictly prohibited. The document clearly requires that platforms must not provide marketing promotion, information dissemination, or technical support for related illegal activities. This will greatly compress the online dissemination space for virtual currency projects within the country and combat their development model of utilizing social platforms for traffic and community operations.
● Crucially, regulatory responsibilities have been enforced on institutions themselves. The document requires banks and payment institutions to strictly conduct customer due diligence, proactively assess and report suspicious clues. This establishes the proactive monitoring and reporting obligations of financial institutions, placing the defenses against money laundering and fraud at the forefront. Any institution that 'knows or should know' yet still provides services will be legally held accountable.
II. Focus extension: RWA is explicitly prohibited for the first time
Unlike past risk warnings, a prominent new highlight of this joint statement is the explicit prohibition of 'tokenization of real-world assets' for the first time.
● Tokenization of real-world assets usually refers to the conversion of rights to physical assets such as real estate, artworks, bonds, and private equity into digital tokens for financing and trading through blockchain technology. In recent years, with places like Hong Kong exploring asset tokenization 'sandbox' projects, this concept has also attracted attention domestically, with some companies attempting to explore the 'domestic assets + overseas issuance' model.
● This time, the seven associations pointed directly at its essential risks, including false asset risk, operational failure risk, and speculative risk, and firmly announced: 'Our financial regulatory authorities have not approved any tokenization of real-world assets.' The document further clarifies that regardless of whether issuance and financing activities occur domestically or abroad, as long as services are provided to domestic residents, they are considered illegal financial activities.
● This move has completely blocked loopholes that allow illegal actors to use 'financial technology innovation' as a guise for illegal fundraising and unauthorized issuance of securities. Analysis indicates that this reflects the regulatory authority's penetrating concept of 'substance over form' in financial activities, where any attempt to segment, tokenize, and publicly finance traditional financial assets without permission is prohibited.
III. Clear definition: Reaffirming that virtual currencies lack monetary properties and analyzing the real risks of 'stablecoins'
While expanding the regulatory boundaries, the document also clearly defines the essence of various virtual currencies, especially conducting an in-depth risk analysis of the recently focused 'stablecoins.'
● The document reiterates that all virtual currencies, including Bitcoin, are not issued by monetary authorities, are not legal tender, do not possess legal compensation, and cannot be circulated or used as currency in the market. For 'air coins' (such as π coin) that claim to be innovative technology, the document directly exposes their lack of substantive innovation, absence of application scenarios, and serious issues of fraud and manipulation.
● For some market participants who harbor a 'compliance fantasy' regarding stablecoins, the document cites the spirit of the central bank meeting, clearly stating that they 'are a form of virtual currency.' The risk warning details three major risks of stablecoins: the inability to effectively meet customer identity verification and anti-money laundering requirements, and the significant risk of being used for illegal activities such as money laundering, fundraising fraud, and unauthorized cross-border fund transfers.
● This definition completely breaks the speculation that stablecoins could become 'exceptions.' Legal experts point out that behind this is the country's resolute defense of the three major security lines: monetary sovereignty, capital project management, and anti-money laundering.
The anonymity, cross-border, and free-flowing characteristics of stablecoins (especially mainstream dollar stablecoins) may effectively create a 'parallel currency system' and fund transfer channel that exists beyond regulation, posing a direct challenge to the country's financial sovereignty and foreign exchange management.
IV. Defending financial sovereignty and responding to global digital financial competition
This comprehensive upgrade of regulation stems not only from the urgent need for domestic risk prevention but also exists within the larger framework of global digital financial competition and the evolution of the international monetary system.
● From an international perspective, dollar-dominated stablecoins are expanding at an unprecedented speed. Research points out that the United States' support for cryptocurrencies is opening up a 'new dollar cycle,' making it a 'digital dollar liquidity' supplement for traditional financial markets, which essentially extends and consolidates dollar hegemony in the digital age.
The United States is attempting to strengthen its international currency status through dollar stablecoins. In this context, allowing dollar-backed stablecoins to circulate and be used freely domestically would be tantamount to opening the door for the infiltration of a 'digital dollar.'
● China's response strategy is clear and firm: on the one hand, taking a 'zero tolerance' prohibitive attitude toward any private digital tokens that may erode monetary sovereignty, interfere with capital controls, or become illegal cross-border fund channels; on the other hand, accelerating the research and application of the legally backed digital currency — digital yuan.
Recently, Shanghai has established an international operation center for digital yuan, among other measures, aimed at optimizing cross-border payments through a secure and controllable official digital currency system, actively participating in and shaping the future global digital payment landscape.
This 'combination of blockage and guidance' strategy reflects the foresight of top-level design. Blocking is to prevent financial risks and the disorderly impact of international capital; guidance is to seize the initiative in the future form of currency and to open new paths for the internationalization of the renminbi in the digital age.
V. Data security, protecting the 'money bag'
Faced with continuously evolving concepts and rhetoric, the seven associations issued a strong call to the public: genuinely enhance risk awareness and protect one's 'money bag.'
● The document warns the public that the price of virtual currencies is extremely volatile and is often used for speculative trading and pyramid schemes. The public should be wary of any displays of 'historical returns,' trading advice, or speculation on virtual currencies or RWA tokens, and should refuse to click links or QR codes from overseas trading platforms. If relevant clues are discovered, they should promptly report to regulatory authorities or file a police report.
● For ordinary investors, this means that the mentality of taking chances must be completely abandoned. In the domestic market, any organization or individual engaging in virtual currency issuance, trading, exchange, or providing information intermediary services for trading is considered illegal financial activity, and any resulting losses will be borne by themselves. Even if trading occurs through overseas platforms, domestic facilitators and service providers will also face legal accountability.
VI. The era of normalized regulation begins, reconstructing the logic of compliant survival.
● The joint declaration of the seven major financial industry associations, in response to the work coordination mechanism meeting led by the central bank, jointly announces the arrival of a new era of virtual currency regulation in China. This is no longer a campaign-style rectification but a tightly woven protective network based on a normalized mechanism, multi-departmental synthetic operations, covering the entire chain of capital flow and information flow.
● The signal conveyed is extremely clear: in mainland China, any commercialization or financialization paths for virtual currencies and their various derivatives (including stablecoins, RWA tokens, etc.) have been completely sealed off. Any market participant, whether institutional or individual, must completely abandon the fantasy of seeking arbitrage in the 'gray area.'
In the future, relevant regulations will only become more refined and in-depth.
For financial institutions and technology companies, the logic of survival and development must be based on a complete severance from virtual currency operations and a proactive fulfillment of risk monitoring responsibilities.
For the country, while strengthening the financial security line, how to leverage underlying technologies such as blockchain to empower the real economy, and how to actively participate in and lead the digital transformation of the global financial system through innovative tools like the digital yuan, will be a more important long-term issue.
This regulatory storm is not only a strong purification of domestic financial order but also a firm declaration of China's financial sovereignty and development path in the turbulent international financial competition.
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