Chinese regulators have stepped up their crackdown on crypto activities, keeping a close eye on tokenization and stablecoin issuance in a Friday notice.
“Recently, influenced by various factors, speculative activities related to virtual currencies and tokenization of real-world assets have frequently occurred, creating new challenges and conditions for risk prevention and control,” said the notice jointly issued by eight national organizations, including the People’s Bank of China (PBOC) and the China Securities Regulatory Commission (CSRC).
The notice reiterates China’s blanket ban on crypto, stating 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 providing such services within China. It also prohibits domestic entities from issuing digital currencies abroad without regulatory approval.
The notice singles out stablecoins – cryptocurrencies pegged to fiat currencies – for special scrutiny. Officials argue that stablecoins duplicate key functions of sovereign money and therefore threaten monetary control.
The new rules clarify that no entity, Chinese or foreign, can issue a renminbi-linked stablecoin abroad without government approval. This also includes foreign branches of domestic companies.
These rules also tighten controls on tokenization, a rapidly growing trend of converting ownership of real-world assets such as equities, real estate or funds into digital tokens.
The notice said Chinese companies that want to tokenize assets overseas must now obtain approval or file with regulators, and their financial and technology partners must meet enhanced compliance standards.
China’s crackdown on cryptocurrencies and related activities has been prominent over the years. The new set of regulations enacted by Chinese authorities in 2021 deems all crypto-related business activities illegal and bans crypto mining, often referred to as the “China ban.” In 2017, authorities banned Initial Coin Offerings (ICOs), labeling them as illegal fundraising and financial fraud, and ordered domestic cryptocurrency exchanges to cease fiat-to-crypto trading operations.
Read More: China Never Banned Crypto Outright