China strikes at cryptocurrencies again. This time they are taking on RWA
People’s Bank of China published a circular that significantly extends the bans in force from 2021. The new regulations cover not only tokenization carried out in China, but also cases in which Chinese assets are abroad. Such activity will be permitted only after obtaining the consent of the relevant authority.
People engaging in such investments cannot count on protection
The bans are accompanied by new obligations for online companies. Operators of online networks and platforms can no longer promote, host or even indirectly support cryptocurrency or RWA-related traffic. This includes, among others: advertising, sales presentations, marketing and paid traffic redirection. If companies find traces of non-compliant activity, they must immediately report it to the appropriate institutions and provide technical support in investigations.
The new document also places great emphasis on inter-ministerial cooperation. It explicitly mentions several key institutions, including the central bank, the ministry responsible for digital infrastructure and the ministry of public security. The aim is to combat fraud, money laundering, illegal business activity, financial pyramids and illegal capital raising using cryptocurrencies and RWA.
Importantly, the Chinese authorities make it clear that people engaging in such forms of investment cannot count on civil law protection. In practice, this means that any losses incurred on this market will not constitute the basis for claims against the state or other entities.
China is one thing, but what about Europe and America?
For the global cryptocurrency market, China’s decision is not a shockbecause Beijing has been consistently distancing itself from decentralized finance for years. In the short term, its impact will be psychological rather than real. Investors and projects have not treated China as an active market for a long timeand trade, development and blockchain infrastructure have already been transferred to the USA, Singapore, Hong Kong, UAE and Europe. Temporary volatility is possible, but without a lasting hit to prices or liquidity.
The long-term consequences are much more important. The Chinese ban clearly shows that countries may perceive the tokenization of real assets as a threat to capital control and the financial system, even more than classic cryptocurrencies. This is a warning signal for projects developing RWA on regulated markets that the future of this segment will depend not on technology, but on the consent of regulators. Globally, the market will therefore move towards greater compliance with the law, stronger licenses and cooperation with the state, rather than full decentralization.
