Mainland China’s approach to virtual assets has been remarkably consistent over the past few years. The headline has never really changed: keep the line firm, keep the pressure on. At the PBOC-led coordination meeting on 28 November 2025, regulators flagged a renewed rise in speculative activity and reiterated that the prohibition-first policy would continue, supported by ongoing enforcement against illegal financial activities.
Then came 6 February 2026. The PBOC, together with multiple ministries and regulators, issued the Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies and Related Matters (PBC Document [2026] No. 42). This was not a routine restatement. It was a perimeter-setting document written in operational language. It tells the market, with much less room for creative interpretation, what is off-limits onshore and what might still be possible offshore, but only if you are prepared to treat tokenisation as regulated finance rather than a technology-led workaround.
1. What actually changed
The Notice does three important things.
First, it reaffirms the core position on virtual currencies. Onshore virtual currency related business activities remain categorised as illegal financial activities and are subject to strict prohibition and enforcement.
Second, it addresses stablecoins with a level of directness that is hard to miss, including a specific constraint on RMB-pegged stablecoins. Read in context, the regulatory concern is straightforward. If a token begins to behave like money in the real economy, regulators will treat it as a monetary and financial order issue, not as a product design choice.
Third, and most importantly for many corporate and institutional readers, the Notice formally defines “Real World Asset (RWA) tokenisation” and brings it explicitly within the same risk disposal framework. The market’s favourite slogan, “RWA is not crypto,” does not carry much weight here. The Notice focuses on substance: converting ownership rights, income rights, or similar interests into token-like instruments, then issuing and trading them.
Once issuance and trading are on the table, the legal and regulatory risks start to look very familiar. Illegal securities issuance. Illegal fundraising. Unlicensed intermediation. Cross-border compliance and AML concerns. The technology may be new. The regulatory instincts are not.
2. What you cannot do onshore
The Notice is designed to close the entire chain. It does not only target issuance. It targets the ecosystem that makes issuance and trading possible.
For virtual currencies, the Notice explicitly sweeps in common operating models such as exchange services, trading and matching, acting as a central counterparty, information intermediation and pricing services, token issuance and financing, and trading of virtual currency related financial products. In simple terms, if you are building a business that completes the loop of “buy, sell, trade, raise, distribute,” onshore China is not the place to do it.
For RWA tokenisation, the message is even more consequential for project teams who like to split functions across borders. The Notice does not only restrict the tokenisation activity itself. It also points at related intermediation and information technology services. That matters because many RWA projects try to keep “tech and ops” onshore while placing “issuance” offshore. The Notice is written to prevent that kind of onshore enabling arrangement from becoming the default playbook.
Supporting rails are also restricted. Financial institutions and payment institutions are prohibited from providing key services such as account opening, fund transfers, clearing and settlement, and custody in connection with prohibited activities. Internet platforms are restricted from providing online business premises, promotional display, marketing, and paid traffic redirection. Even “we are only doing promotion” or “we are only providing technical tools” can quickly become a weak argument if the overall chain is viewed as enabling an illegal financial activity.
There is also a softer, but telling, signal. The Notice uses market supervision tools, including restrictions around business naming and advertising. That indicates a governance approach that is not limited to financial licensing. It is about reducing the surface area for mass marketing and public-facing distribution.
3. What may still be possible
If you read the Notice carefully, the door is not welded shut. It is locked, and the key sits with approvals, filings, and strict supervision.
Two ideas matter.
First, there is a very narrow onshore carve-out referencing situations approved by competent authorities and conducted by relying on specific financial infrastructure. This is not a general permission. Treat it as an exception that is likely to be tightly controlled, and possibly highly case-specific.
Second, there is a cross-border pathway. The Notice contemplates that Mainland entities may pursue certain forms of RWA tokenisation offshore, but only if they follow required approval or filing processes and accept strict regulatory oversight under the principle of “same business, same risks, same rules.” That is not a “Web3 lane.” It is much closer to a regulated cross-border financing or securitisation lane, with tokenisation used as the delivery mechanism.
The Notice also acknowledges that offshore subsidiaries and branches of Mainland financial institutions may provide RWA tokenisation related services abroad. The permission, however, comes with an expectation: do it prudently, meet onboarding, suitability, and AML standards, and keep the activity inside the parent group’s compliance and risk management perimeter. Offshore does not mean ungoverned.
4. Where Hong Kong fits in
This is where the contrast becomes most commercially relevant.
Hong Kong’s policy logic has generally been “innovation within a regulated perimeter.” In practice, that means tokenisation, including tokenised instruments that resemble traditional securities, can be explored through licensing, disclosure, custody, suitability, and AML disciplines. Hong Kong’s licensed virtual asset trading platform regime also reflects an approach that is structurally different from the Mainland’s prohibition-first model.
But Hong Kong is not a magic shield.
The Mainland Notice draws a cross-border boundary that matters for anyone building Mainland-adjacent products: offshore parties must not provide illegal virtual currency or RWA tokenisation related services to onshore Mainland parties. Once your structure touches onshore clients, onshore marketing, or tokenisation of onshore rights and interests without going through the necessary approval and filing channels, you are no longer dealing with “a Hong Kong licensing question.” You are dealing with a cross-border compliance question, and you will be judged by the weakest link in the chain.
The realistic view is this. Hong Kong can be a compliant landing zone for RWA tokenisation when the product is treated as a regulated financial instrument and distributed accordingly. If the project is Mainland-facing in any meaningful way, the boundary design and regulatory engagement become part of the product, not an afterthought.
5. A personal take – the end, or the start?
The Notice reads less like a commentary on blockchain and more like a statement about controllability. Regulators are not debating whether tokenisation is clever. They are drawing hard lines around fundraising, trading, settlement, cross-border flows, and AML risk.
RWA tokenisation being explicitly defined is significant. It suggests regulators understand where the market has moved. It also makes one thing painfully clear: “RWA” is not a free pass. Tokenisation can improve distribution and liquidity. It can also compress the timeline for misconduct if it is positioned outside a robust regulatory framework.
From a Hong Kong perspective, this is where the opportunity sits. Hong Kong’s advantage is not that it is looser. It is that it can turn innovation into something licensable, supervisable, and bankable. Teams that treat tokenisation as regulated finance can still build. The path is narrower, but it is navigable. Teams that treat tokenisation as regulatory arbitrage will find that the path keeps shrinking, and not just in the Mainland.
Co-authors: Basil Hwang & Jas Wu
