Seven Chinese financial associations declared RWA Tokenization illegal
Crypto journalist
Anas Hasan
Crypto journalist
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Seven major Chinese financial industry associations have jointly declared that real-world asset (RWA) tokens are an illegal financial activity, just after tightening their ban on crypto trading.
According to local reports, China Internet Finance Association, China Banking Association, China Securities Association, China Asset Management Association, China Futures Association, China Listed Companies Association, China Payment and Clearing Association have warned that RWA activities have no legal basis to operate according to Chinese law, both domestic and international experts.
The statement lists RWA as the main manifestations of illegal virtual currency activities along with stablecoins, “worthless cryptocurrencies” and crypto mining, which are new financial technologies that are awaiting regulatory clarification by classifying tokenization projects as high-risk and fraudulent methods.
Lawyer Liu Honglin described the syndicated announcement as an “eye-popping cross-industry, cross-industry ‘unified messaging' exercise that only occurs at critical times to prevent systemic financial risks.”
RWA: A financial undertaking subject to the Securities Act.
The joint announcement clearly defines tokenization of real-world assets as “financial and transactional activities by deriving tokens or other instruments of rights and obligations from token properties.”
Regulators stressed that “my country's financial regulatory authorities have not authorized any real-world asset-token activities.”
This position contrasts with peers such as Singapore, which leads the world for RWA adoption by 2025.
The authorities listed three significant violations of existing Chinese law specifically related to RWA operations.
Projects that offer tokens to the general public when fundraising incurs illegal fundraising fees, but facilitating transactions or distributing tokens without permission constitutes unauthorized public securities offerings.
It may refer to illegal futures trading activities involving the use of token trading or betting strategies, which are based directly on the provisions of China's Criminal Law and Securities Law rather than a general policy warning.
The document assesses that even in projects where project teams believe their assets are real and technologically transparent, RWA token structures do not guarantee legal ownership or the removal of underlying assets, even in projects where regulators have assessed risk.
The warning specifically addressed projects that attempt to interrupt the “real-world resource squeeze,” “foreign compliance path” and “technology service output” narratives.
Shared responsibility in a new enforcement framework
The notice specifically targets Web3 service ecosystems that support RWA activities, not just project operators, and “relevant overseas virtual currency and real-world asset token service providers, as well as domestic institutions and individuals engaged in currency-related businesses and who know or should know that they are still providing services, will be held liable under the law.”
This “knew or should have known” standard establishes a legal presumption of liability based on reasonable factual judgment against the registration of an offshore company with Mainland China employees, a common Web3 operating model.
Attorney Honglin said this means groups cannot escape liability by claiming pure technology service delivery or infrastructure support roles.
Project planners, technology outsourcing providers, marketing agents, influencers and payment interface providers all face legal consequences if they offer RWA projects targeting Chinese users.
The guidance notes that even hiring an operations person in China can expose offshore projects to legal risks.
This enforcement approach effectively cuts off the entire domestic Web3 service chain built around RWA in China, as supporting services lose viable business models alongside the ban on core operations.
The attack followed a series of fraudulent activities operating under the RWA branding, which the document says “criminals use to promote related trading and speculation activities, stable coins, worthless coins (such as π coins), real-world value (RWA) tokens, and ‘mining' illegal fundraising, pyramid schemes, and other illegal activities and He stated that they are using other illegal activities.
The timing coincides with China's push to internationalize the digital yuan with a new Shanghai operations center focused on cross-border payments and blockchain services, while preventing major tech companies Ant Group and JD.com from simultaneously issuing a stablecoin to protect Hong Kong's monopoly on the supply of the state currency.
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