China’s Strategic Pivot in the Tokenization Landscape

Major global financial entities are projecting significant expansion in the field of real-world asset tokenization. Over the past year, this market has seen its volume multiply fourfold, maintaining its trajectory even as broader cryptocurrency sectors face stagnation. Current blockchain pioneers like Ethereum are yet to fully harness the potential upsides. Amid this development, we explore China’s positioning within this dynamic sector.

What Role Do China and Hong Kong Play?

China is known for its stringent stance against cryptocurrencies, reaching a climax in 2021 with comprehensive bans. Conversely, Hong Kong has taken a different path since 2023 by modifying its crypto regulations, distancing itself from mainland policies, and targeting an influx of at least $500 billion. However, hopes that Hong Kong would channel significant funds from mainland investors did not meet expectations. As a result, the concept of Hong Kong as a trial space for China’s crypto acceptance appears less viable.

How is China Responding with New Regulations?

China recently introduced new guidelines to address the evolving tokenization landscape. The People’s Bank of China, in collaboration with other agencies, released comprehensive regulations titled Yin Fa [2026] No. 42, along with the China Securities Regulatory Commission’s specification for tokenized securities based on domestic assets. These measures chart new paths, superseding the previously established Notice No. 924.

“Tokenization of asset rights or income by using cryptographic and distributed ledger technologies (DLT).”

While domestic RWA activities largely remain restricted, regulatory-compliant operations can proceed under specified conditions. Token issuances based on Chinese assets now necessitate formal registration and adherence to newly defined compliance standards by the CSRC.

Supervisory roles are defined based on asset type under the latest regulations. The National Development and Reform Commission will manage RWAs related to external debt, while the CSRC and SAFE oversee equity-linked RWAs and fund repatriation, respectively. This clarity instills structured oversight into the system.

Chinese banks with overseas operations must integrate RWA services into their risk management and anti-money laundering frameworks, marking a significant shift towards structured oversight.

These regulatory updates reflect a strategic correction rather than an open embrace of crypto. China is not looking to stand as the global crypto epicenter, nullifying speculative claims contrary to anticipations from global figures such as former US President Donald Trump. These adjustments suggest a nuanced approach focusing on regulatory control over outright prohibition.