China’s Comprehensive Ban on Cryptocurrency
In a significant development for the cryptocurrency sector, China has announced a comprehensive ban on all cryptocurrency and real-world asset (RWA) tokenization operations, declaring such activities to be illegal financial practices. This strict directive, issued by the People’s Bank of China (PBoC) in conjunction with several government ministries, makes it unequivocal that virtual currencies, including prominent cryptocurrencies like Bitcoin, Ether, and Tether, lack any legal tender status and cannot be utilized as currency in commercial transactions.
Illegal Operations and Restrictions
According to the joint notice, any business operations involving cryptocurrencies—including conversion between fiat and crypto, trading between different cryptocurrencies, market-making, and the issuance of tokens—are now classified as illegal and will face stringent prohibitions. Furthermore, the issuance and trading of tokens that represent ownership or income rights to real-world assets are similarly deemed illegal unless they receive explicit authorization within specific financial systems set by the authorities. Additionally, foreign entities are also restricted from offering RWA tokenization services to Chinese users without appropriate legal approval.
This move reinforces the framework established in 2021 under the Yinfa No. 237 regulation, which previously categorized major crypto operations as illegal and barred offshore exchanges from servicing clients based in mainland China. Financial institutions, as well as payment companies, are now prohibited from engaging in any transactions related to virtual assets, which includes account opening, fund transfers, settlements, and custodial services.
Internet Platforms and Mining Crackdown
The directive further imposes strict controls on internet platforms, restricting them from facilitating any form of promotion or commercial activity related to cryptocurrencies or RWA services. They are also mandated to assist in the shutdown of related digital resources, such as websites and mobile applications.
In addition to the clampdown on trading and tokenization, the Chinese government has intensified its crackdown on cryptocurrency mining, instructing regional authorities to identify and dismantle any existing mining operations and to prohibit the establishment of any new projects.
Regulatory Consistency and Market Impact
Regulators have emphasized a consistent application of rules, insisting that both domestic and foreign entities connected to local operations must adhere to the same regulatory standards. Without preceding approvals, these entities cannot issue virtual currencies or engage in RWA-type securities tied to onshore assets.
This new enforcement comes as global interest in cryptocurrencies remains volatile. As of now, Bitcoin is trading around $66,005, down approximately 7.9% in the last 24 hours, while Ethereum is at about $1,890, reflecting an 11.6% decrease. Solana has also seen a significant decline, trading close to $77.8, down around 15.4%.
With this directive taking immediate effect and revoking the previous 2021 guidelines regarding speculative trading, it illustrates a decisive shift in China’s approach towards a more rigorous regulatory environment aimed at safeguarding economic stability and maintaining control over financial systems, effectively eliminating any possibility for crypto-related experimentation.
