China’s top financial institutions have just issued an unprecedented joint warning targeting RWA tokenization and crypto activity.
The authorities said that RWA tokenization is not approved in the country, pointing to significant risks and illegal activities.
Institutions and the public are being asked to avoid all RWA and virtual currency activities as the crackdown intensifies.
China has issued its strongest cryptocurrency warning yet. That is, the tokenization of real world assets (RWA) is completely unwelcome.
Seven major financial associations, including the China National Internet Finance Association, issued a joint notice urging citizens and institutions to stay away from RWAs and virtual currencies, saying they are risky, unauthorized, and linked to illegal activities.
RWA grouped by high-risk crypto activity
In the alert, the association puts RWA in the same category as stablecoins, memecoins, “aircoins” such as Pi, and virtual currency mining.
They stress that Chinese regulators “have not approved any tokenization activity for real-world assets” and close the door on any assumption that RWA could operate in a gray area.
The risks they cite are simple: fake assets, operational failures, speculation, and schemes disguised as innovation. It also warns that RWA tokens could be used for illegal fundraising, unauthorized securities issuance, and even illegal futures trading.
Cryptocurrency is also back under the microscope
The warning includes a reminder that virtual currencies cannot be circulated or used as currency in China. Tokens without clear technical or commercial value are vulnerable to tampering and fraud, a message China has long repeated, but this level of coordination across industry bodies is rare.
Stablecoins are once again in the spotlight following the People’s Bank of China’s statement last week that they do not meet China’s KYC and AML requirements.
Financial institutions are ordered to completely withdraw
All member institutions, including trading platforms, issuers, and intermediaries, are directed not to participate in, support, or provide services for virtual currencies or RWA tokens.
The notice even warns that domestic staff working for foreign crypto or RWA companies could be held liable if they “knew or should have known” that they were supporting such activities.
China has made its position clear by positioning RWA alongside cryptocurrency activities, which it currently considers off-limits.
