Who are the thirteen ministries and seven associations lashing out at?

Written by: Zhang Feng

On November 28, 2025, the People’s Bank of China, the National Financial Regulatory Administration, the China Securities Regulatory Commission, and ten other ministries jointly convened a coordination meeting on matters related to virtual currencies. Subsequently, seven associations, including the National Internet Finance Association of China and the China Banking Association, issued the “Risk Alert on Preventing Illegal Activities Related to Virtual Currencies and Others” (hereinafter referred to as the “Alert”), once again clarifying their regulatory stance on virtual currencies and related activities. The document specifically lists “Real World Asset Tokens” (RWA) alongside stablecoins, “air coins,” and “mining,” sparking widespread discussion in the market about whether RWA is being comprehensively categorized as “illegal activities related to virtual currencies.”

A close reading of the text reveals that, while the regulators have taken a firm stance, they also demonstrate a rational approach that differentiates between activities of different natures. RWA and stablecoins are not simply equated with air coins and other illegal forms and outright banned; instead, the focus is on risk warnings and compliance boundaries, leaving room for understanding truly compliant and prudent innovation.

I. RWA Not Simply Categorized as “Illegal Activity,” but Emphasizing “Multiple Risks”

In the main text of the “Alert,” there are obvious differences in the way different virtual currency-related activities are described. For “air coins (such as Pi Coin),” the document explicitly states that they “lack substantive technological innovation, have no clear business application scenarios or value, possess non-transparent issuance and operation mechanisms, and are plagued by severe fraud and market manipulation issues,” emphasizing that these are often associated with pyramid schemes and scams. This characterization is clearly negative and prohibitive.

For “stablecoins” and “real world asset tokens,” the document focuses on warning about risks and describing the current situation. Regarding stablecoins, it states that they “currently cannot effectively meet requirements for customer identification, anti-money laundering, etc., and are at risk of being used for money laundering, fundraising fraud, and illegal cross-border fund transfers.” Regarding RWA, it states that they “raise and trade funds by issuing tokens or securities with token characteristics, facing multiple risks, including fake asset risks, business failure risks, speculative risks, etc.,” and clearly points out that “at present, no RWA tokenization activities have been approved by Chinese financial regulators.”

From the wording, it is clear that regulators have not directly defined stablecoins or RWA as “illegal activities,” but rather emphasize the risks they currently pose and their unapproved status. This is contrasted with the explicit prohibition of air coins, reflecting a differentiated regulatory approach. As a technical path for representing physical assets on the blockchain, RWA itself has theoretical advantages such as improving liquidity and reducing transaction costs. The regulators have not denied its potential value entirely but instead issue warnings regarding potential market chaos.

II. The Scope of the Document Focuses on “Illegal Financial Activities,” Not Blanket Bans on the Entire Industry Chain

In sections two and three of the “Alert,” clear requirements are laid out for various institutions and the public. The prohibitive clauses are mainly centered around “illegal financial activities”:

“Domestic institutions and individuals engaging in fiat-virtual currency conversions, RWA token issuance, and fundraising in China are suspected of illegal issuance of tokens, illegal fundraising, unauthorized public securities offerings, illegal futures business, and other illegal financial activities.”

“Overseas virtual currency and RWA token service providers directly or indirectly offering related business activities or services to domestic entities are also considered engaging in illegal financial activities.”

These regulations clearly target activities involving unauthorized issuance, fundraising, trading, and service provision conducted domestically. The core target is the “illegality” of the activity, not the technology or concept itself. The document requires member units not to provide services related to the “domestic issuance and trading” of virtual currency or RWA, nor to provide services for related “business activities,” focusing regulation on specific illegal or non-compliant business conduct.

This means that if an RWA-related activity:

1. Does not involve illegal public issuance or fundraising domestically;
2. Does not provide support for illegal domestic activities;
3. Operates in a manner compliant with current financial laws and regulations, such as through legal channels, targeting qualified investors, and completing necessary regulatory approvals and registrations;
4. Especially if it is carried out in a jurisdiction such as Hong Kong, which already has virtual asset regulatory frameworks in place, conducted lawfully and with effective risk isolation from the domestic market;

Then, it may not fall directly within the scope of the prohibitions explicitly stated in the “Alert.” The document aims to cut off the domestic industry chain supporting illegal activities, not to ban all global discussions, international compliance practices, or forward-looking research related to RWA.

III. Compliant RWA Exploration Should Be Based on Legal Frameworks and Leverage Dual Jurisdiction Rules

The RWAs we discuss should refer to compliant explorations within existing legal frameworks, particularly those that meet the requirements of both mainland China and Hong Kong, as well as relevant cross-border legal norms. Since 2022, Hong Kong has gradually established a comprehensive Virtual Asset Service Provider (VASP) licensing regime and has issued regulations regarding the issuance and trading of tokenized securities and other financial products. In 2023, the Hong Kong SFC further issued circulars on tokenized securities and collective investment schemes, providing guidance for compliant asset tokenization.

Against this backdrop, a compliant RWA project may have the following characteristics:

• Issuance compliance: Conducted in a permitted jurisdiction (e.g., Hong Kong), issued to qualified investors in accordance with local regulations, and with all necessary registrations or approvals completed.
• Real assets: Corresponding to real, clear, and lawfully owned real-world assets, with effective audit, custody, and information disclosure mechanisms in place.
• Technological compliance: Meets requirements for cybersecurity, data privacy, and AML/CFT.
• Service segregation: All related technical development, legal consulting, and asset management services are strictly in accordance with the laws of the service-providing jurisdiction, without direct support for illegal domestic activities.
• Investor suitability management: Strict implementation of investor identification and risk tolerance assessment to prevent the spread of risks to the general public who lack the ability to identify them.

Such compliant operations are fundamentally different from the “fake asset risks,” “speculative risks,” and illegal fundraising or securities issuance behaviors warned against in the “Alert.” The aim of regulatory policy is to “let good coins drive out bad,” crack down on illegal activities, protect investors, and maintain financial stability—not to hinder valuable, compliant fintech innovation.

IV. Coordination Meeting and “Alert”: Potential Benefits for Compliance and Clear Warnings for Illicit Activities

The recent coordination meeting of thirteen ministries and the release of the “Alert” by seven associations can be regarded as a concentrated response and risk clean-up to current market chaos. The core impact is as follows:

• Drawing clear lines and purifying the market: The most direct effect is the crackdown and elimination of activities disguised as RWA or stablecoins for the purpose of pyramid schemes, scams, illegal fundraising, etc. (especially air coins like Pi Coin), restoring the industry’s reputation and preventing “bad coins from driving out the good.”
• Increasing institutional responsibility: Banks, payment, securities, and internet platforms are required to strengthen due diligence, cutting off funding, promotion, and technical support channels for illegal activities, thereby increasing the costs and risks of running illegal operations.
• Educating the public and raising awareness: Risk warnings are issued through authoritative channels to the public, which helps reduce irrational speculation and foster a rational investment mindset.

For institutions and projects committed to compliance, this policy signal may bring about cautious market sentiment in the short term, but in the mid-to-long term, it is actually beneficial: First, clearer regulation reduces uncertainty in the “gray area,” with more explicit rules for compliant operations; second, a cleaner market environment helps compliant projects gain more rational attention and resources; third, by emphasizing “risk” and “unapproved” rather than “blanket bans,” there is regulatory room left for compliant pilot programs when conditions and rules are mature in the future.

V. Rational Consideration Behind a Firm Stance: Differentiation and Risk-Based Approach

Looking at the actions of the thirteen ministries and seven associations, they reflect a firm attitude combined with rational regulatory wisdom.

The firm attitude is manifested in: “zero tolerance” for any form of illegal financial activity, resolutely safeguarding national financial security and social stability; explicit bans and crackdowns on attempts to circumvent existing legal frameworks to carry out illegal issuance, trading, or service provision domestically; and timely risk control and response to current market hype.

Rational thinking is reflected in: differentiated treatment of various virtual currency-related concepts, banning obviously fraudulent activities like air coins, but focusing on the inherent risks and current regulatory status of stablecoins and RWA; a risk-based approach, with regulatory measures focused on the illegality and risk substance of specific behaviors rather than a “blanket ban” on technology or concepts; and leaving room for future exploration by emphasizing “unapproved” and risk, but not closing the door on compliant innovation under improved rules and risk controls.

This rationality stems from a profound understanding of the complex relationship between financial innovation and risk control. Blockchain technology and asset tokenization have their potential value, but must be developed in an orderly manner within effective legal and regulatory frameworks. The current regulatory posture is a prudent balance, prioritizing the prevention of real risks while allowing space for future compliant development.

In summary, the coordination meeting of thirteen ministries and the “Risk Alert” from seven associations have listed RWA and stablecoins as areas of risk concern, but have not simply equated them with air coins and other illegal activities or imposed blanket bans. The core of the document is to crack down on all illegal financial activities and their industry chain support within China, aiming to draw a red line, purify the market, and protect investors.

For market participants, the key is not to fear the concept, but to respect the law and risk. Any exploration involving RWA or stablecoins must place compliance first, strictly abiding by domestic and foreign laws and regulations, especially avoiding illegal domestic issuance, trading, or service provision. Within the existing legal framework—particularly in jurisdictions like Hong Kong that have established relevant rules—it is still possible to pursue compliant and prudent exploration.

In the short term, this regulatory statement serves as a “warning sign” and “cleaner” for market chaos; in the long run, it may become a “signal light” and “cornerstone” for the industry’s move toward regulated development. It sends a clear message: Chinese financial regulators, while upholding the baseline of safety, continue to maintain a rational perspective and assessment of frontier technologies. There is both attitude and rationality—this may well be the regulatory norm that must be understood and adapted to by those seeking long-term development in China’s emerging fintech sector. The future will belong to those who can embrace technological innovation while deeply understanding and adhering to the spirit of compliance.