Trillion-dollar giants are forecasting exponential growth in real-world asset (RWA) tokenization over the coming years. Already, the RWA market has quadrupled in just one year, gaining strength even as most cryptocurrency markets remain stagnant. So far, leading public blockchain networks like Ethereum, which have laid the foundations of the RWA wave, have yet to fully reap the benefits. This begs the question: where does China stand in this rapidly evolving arena?
China, Hong Kong, and Cryptocurrency
China cemented its reputation as a crypto-skeptic nation by enacting sweeping bans on cryptocurrencies in 2021. In contrast, Hong Kong repositioned itself in 2023 by easing crypto regulations and diverging from mainland China, promising capital inflows estimated at a minimum of $500 billion—a move that garnered considerable attention at the time. However, expectations that Hong Kong’s crypto products would attract robust demand fell short. The much-anticipated scenario in which investors on the mainland would channel significant funds through Hong Kong failed to materialize. Now, the notion that China is setting up Hong Kong as a pilot zone on the path to embracing cryptocurrencies appears to have lost momentum.
Meanwhile, former US President Donald Trump and his senior advisors have repeatedly asserted over the past year that the US must become the global hub for crypto—warning that otherwise, China could seize that leadership, which they argue would be detrimental to American interests. Nevertheless, China seems unfazed by such rhetoric.
China Rolls Out RWA Regulations
This month, the People’s Bank of China (PBOC) and seven other agencies issued notice Yin Fa [2026] No. 42, addressing risks associated with virtual currencies. The China Securities Regulatory Commission (CSRC) published its own rules for the overseas issuance of asset-backed, tokenized securities grounded in domestic assets.
Eight central agencies—including PBOC, CSRC, and the State Administration of Foreign Exchange (SAFE)—collectively released “Circular No. 42,” while the CSRC introduced its “Guideline No. 1.” These documents effectively repeal the prohibitive “Notice No. 924” from 2021, and for the first time, officially define RWAs within a legal framework.
“Tokenization of asset rights or income by using cryptographic and distributed ledger technologies (DLT).”
While domestic activities involving RWAs are still deemed illegal in principle, the authorities have carved out a compliance exception: if such activities gain regulatory approval and are conducted within specific financial infrastructure, an exemption is granted. For overseas token issuances based on mainland Chinese assets, the CSRC now requires registration, full disclosure, and stringent compliance protocols.
The latest regulatory move also delegates supervisory authority to institutions depending on the type of asset involved. For instance, the National Development and Reform Commission (NDRC) will oversee RWAs classified as external debt; the CSRC takes charge of RWAs tied to equities and securitizations; and the SAFE is responsible for the repatriation of overseas funds.
Chinese banks’ overseas branches are now mandated to incorporate RWA services within frameworks for local risk management and anti-money laundering (AML) standards.
This approach does not signal China’s wholehearted embrace of the crypto world; rather, it marks a shift away from outright prohibition toward a more calibrated stance. Ultimately, these new regulations indicate that China has no desire to become the global capital of crypto—contrary to the warnings issued by Trump and his inner circle.
