Chinese regulators have expanded their crackdown on crypto activities, imposing strict oversight of tokenization and the issuance of stablecoins in a notice published Friday.
“Recently, under the influence of various factors, speculative activities related to virtual currencies and tokenization of real-world assets have occurred frequently, posing new challenges and new situations in risk prevention and control,” said the notice, jointly issued by eight domestic organizations including the People’s Bank of China (PBOC) and the China Securities Regulatory Commission (CSRC).
The notice reiterates China’s blanket ban on cryptocurrencies, saying that trading, issuing or facilitating transactions involving digital currencies such as bitcoin ether or stablecoins like Tether’s USDT is illegal.
The ban extends to foreign entities and individuals offering such services in China. It also prohibits domestic entities from issuing digital currencies abroad without approval from regulatory authorities.
The advisory singles out stablecoins – cryptocurrencies tied to fiat currencies – for special consideration. Authorities say stablecoins replicate key functions of sovereign money and therefore threaten monetary control.
The new rules make clear that no entity, Chinese or foreign, can issue a stable currency linked to the renminbi abroad without government approval. This includes foreign branches of domestic companies.
The rules also increase control over tokenization, the fast-growing trend of turning ownership of real-world assets like stocks, real estate or funds into digital tokens.
Chinese companies that want to tokenize assets overseas must now obtain approvals or file an application with regulators, and their financial and technology partners are required to meet enhanced compliance standards, the notice said.
China’s crackdown on cryptocurrencies and related activities has been a staple of recent years. The new set of rules builds on 2021 Chinese authorities deeming all crypto-related business activities illegal and banning crypto mining, often referred to as the “China ban.” In 2017, authorities banned initial coin offerings (ICOs), calling them illegal fundraising and financial fraud, and ordered domestic cryptocurrency exchanges to end fiat-to-crypto trading operations.
Read more: China Never Completely Banned Crypto
