On February 6, 2026, following the reaching of consensus with cyberspace security and judicial authorities, and as approved by the State Council, all the PRC regulatory authorities responsible for virtual asset regulation (including PBOC, CSRC, SAFE, NDRC, and public security, and information technology authorities) jointly issued the Notice on Further Preventing and Managing Risks Related to Virtual Currency and Other Activities (the "Notice"). The Notice comprehensively lays out the PRC government’s policies on regulation of virtual assets, with virtual currencies continuing to be subject to a strict ban, while real world asset (“RWA”) tokens, for the first time, are specifically allowed although certain details on implementation remain to be clarified.

1. RWA Tokenization: More Clarity and Relaxation

Compared with the previously ambivalent regulatory stance, the new rules bring more clarity to RWA tokenization. In the new rules, the regulators have taken a more permissive (though still tightly controlled) approach to RWA tokenization as compared to virtual currency, by establishing a tiered framework for the regulation of RWA tokenization which provides for a classification of what is prohibited and what may be permitted (subject to conditions).

Permitting Cross-border Issuance by Onshore Entities

Under the new rules, an onshore entity may pursue offshore RWA tokenization (a “Cross-border Issuance”) provided that it completes the relevant procedures and is subject to prudent supervision by the competent authorities. Under the Notice, RWA tokens can take any of the following forms: (i) foreign debt; (ii) quasi asset-backed equity securities with underlying onshore assets or income streams; and (iii) other forms of RWA tokens with underlying onshore assets.

For type (ii), the Guidance further introduces a CSRC filing requirement and sets out detailed requirements covering, among other things, onshore assets, onshore asset owners, filing documents, ad hoc reporting. However, the applicable procedures and requirements for types (i) and (iii) remain unclear.

 In relation to type (i) activities, they will need to follow existing foreign debt approval/registration/filing requirements, but whether and to what extent tokenization specific requirements will be imposed remains unclear.

Permitting PRC Parent Financial Groups’ Offshore Subsidiaries/Branches to Provide RWA Tokenization Services Offshore

Previously, offshore subsidiaries of domestic financial institutions were informally discouraged by regulators from providing RWA related services in an offshore jurisdiction. The Notice now expressly allows this group of institutions to provide services relating to RWA tokenization, provided that the services are conducted prudently and in compliance with applicable laws and regulations, including requirements on qualified professionals and systems, effective risk management (KYC, suitability, AML, etc.), as well as being integrated into the group-level compliance and risk management of the onshore parent group.

Filing Requirements on Intermediaries and IT Vendors

For intermediaries and IT vendors providing services relating to Cross-border Issuance activities, the Notice requires them to go through regulatory approval and/or filing procedure for the services concerned, apart from the general requirement that they shall enhance internal risk control and compliance management. However, for now the specific approval or filing requirements are unclear.

Prohibiting Onshore RWA Tokenization Activities

Notwithstanding the relaxation on cross-border issuance of RWA tokenization activities and related services, onshore issuance and trading of RWA tokens and service provision for RWA tokenization, including financial, intermediary, technology and information services are expressly prohibited, with the only exception being where the relevant activities are approved by competent PRC authorities and via designated financial infrastructure (no further details are provided on such exception, but this leaves room for more innovative activities in future which supports PRC’s state policy and interest as the regulators see fit). The prohibition also applies to the provision, on a cross-border basis, of services relating to RWA tokenization by offshore service providers to onshore persons, which is a consistent policy of the PRC regulators.

2. Virtual Currencies: Zero-tolerance Policy reinforced

The Notice reiterates the PRC government’s attitude that virtual currencies do not have the same legal status as fiat currencies, and their use in the market shall be prohibited. This also specifically extends to stablecoins.

In particular, the Notice specifies:

Offshore Issuance of Virtual Currencies by PRC Persons (and Controlled Entities) Prohibited: Onshore persons and their controlled offshore persons are prohibited from issuing virtual currencies in an offshore jurisdiction without competent PRC regulators’ approval. This marks a significant shift, as the regulators are now specifically asserting jurisdiction over offshore activities by offshore subsidiaries of PRC persons, although the implementation remains to be tested.

Offshore RMB-linked Stablecoins Issuance by any Person being Prohibited: unless otherwise approved by competent PRC regulators, no person is permitted to issue RMB-linked stablecoins in an offshore jurisdiction. Although the Notice does not specify whether RMB refers to CNY or CNH, we tend to take the view that it covers both given CNH may have an impact on the price and regulatory regime of CNY.