China has issued its most sweeping crypto crackdown since 2021, as seven major financial industry associations released a joint risk warning declaring all crypto-related activities— including stablecoins, airdrops, mining, and real-world asset (RWA) tokenization—illegal in the mainland.

The notice, published on December 5, marks China’s first explicit ban on RWA tokenization. Regulators are concerned that RWA could be used as a sophisticated channel for capital flight, allowing individuals to convert domestic assets into tokens and transfer them offshore outside traditional banking and FX controls.

This coordinated move mirrors the 2021 campaign that forced all exchanges and mining operations out of China, causing the country’s share of global Bitcoin hashrate to collapse from 75%.

The statement reiterates that virtual currencies, including stablecoins and tokens like Pi coin, have no legal status and cannot circulate domestically. Individuals and organizations are barred from issuing, trading, or fundraising with RWAs or crypto—even if operations are conducted through offshore entities but employ staff inside China.

Regulators emphasized stricter enforcement following a PBoC meeting on November 28 that classified stablecoins as virtual currencies subject to prosecution. A recent report also showed a 37% year-on-year rise in money laundering involving digital assets.

Analysts describe the crackdown as a “four-layer blockade”: shutting down mining infrastructure, blocking stablecoin payment channels, closing RWA routes, and targeting schemes such as Pi Network.

The warning also draws a firm line between mainland China and Hong Kong, which continues to embrace regulated digital assets. Hong Kong’s stablecoin licensing regime launched in August 2024 and has attracted 80 applicants, with first approvals expected in 2026. RWA pilots are allowed there but limited to offshore assets and non-mainland users.