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China’s top financial regulators have significantly expanded the existing ban on cryptocurrencies. This expansion specifically targets stablecoin issuance and real-world asset tokenization.
The joint notice was issued on February 6 by eight agencies, including the People’s Bank of China and the China Securities Regulatory Commission. This notice reflects the strictest capital control measures since the historic 2021 ban on Bitcoin mining and trading.
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Beijing closes external loopholes in new stablecoin rules
Regulatory agencies have stated that the recent increase in virtual asset activity poses a direct threat to the stability of the country’s financial system and its monetary sovereignty, the report said. Report.
Below Rules Under the new law, foreign entities are strictly prohibited from providing stablecoin or asset tokenization services to Chinese residents.
The campaign is also focused, most importantly, on what is known as the “offshore loophole” prohibiting domestic companies and their overseas subsidiaries from issuing digital currencies without explicit government approval.
The People’s Bank of China has tightened, secondAdvertisingHowever, stable currencies, especially those linked to fiat currencies, bear the characteristics of sovereign money.
The officials, therefore, noted that these private digital assets undermine the state’s ability to control the money supply, and also stated that these assets ignore strict anti-money laundering protocols and know-your-customer standards.
The notices specifically prohibited any entity from issuing renminbi-denominated stablecoins abroad, with analysts seeing the move as a defense of… e-CNY, the official digital currency of the Chinese central bank.
The directives also targeted the sector Tokenization of Real Estate Assets (RWA) Prosperous with a value of $24 billion.
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Regulators have reclassified unauthorized tokenizations, such as partial ownership of real estate or securities, as “illegal public securities offerings” and “unauthorized futures activity.”
The notice said that the activity of tokenization of physical assets in China, as well as the provision of intermediary services and related IT services, which are suspected to be involved in the issuance of illegal tokens, unauthorized public offerings of securities, illegal operations of securities and futures business, illegal fundraising, or other illegal financial activities, should be prohibited.
The notification leaves a narrow path for the activities carried out on the financial infrastructure approved by the government.
It is necessary, however, that any company seeking to code overseas must adhere to stricter compliance standards and obtain local approval.
The central government intends to launch a collaborative framework that integrates local and national surveillance to implement these measures.
The coordinated approach aims to eliminate regulatory arbitrage previously used by Chinese technology and financial companies, which have often taken advantage of neighboring states to experiment with blockchain-based assets outside Beijing’s direct authority. These companies have tapped neighboring states to experiment with blockchain-based assets Outside Beijing’s direct control.
To strengthen the control of both Stablecoins and RWA, sent from Beijing A signal that the next generation of digital finance must be entirely in authorized state systems that require authorization.
