Are China's new cryptocurrency regulations a boon or a bane?

Not only those in the cryptocurrency circle, but also mainland financial institutions are starting to see a resurgence of the stablecoin craze, frequently paying close attention to and interpreting the notice issued by the People's Bank of China and eight other departments on February 6th regarding the prevention and handling of virtual currency risks, as well as the regulatory guidelines issued by the China Securities Regulatory Commission (CSRC) regarding the issuance of asset-backed securities tokens overseas.

In the past two days, whether at offline events in Hong Kong or at internal policy interpretation meetings organized by several financial institutions that I was invited to participate in, I found that many of our concerns were aligned. Therefore, I decided to write this article to summarize the framework of Document No. 42 and CSRC Document No. 1, as well as the business details we have observed in legal practice and industry operations, for your reference.

From an overall qualitative perspective, my personal opinion is that the latest regulatory policies are "positive, but the benefits are limited."

To understand this judgment, we must first clarify the relationship between Document No. 42 and CSRC Document No. 1: This is a logic of "principle" plus "exception." Document No. 42's content on preventing and handling risks related to virtual currencies is the principle, the underlying principle; while the CSRC's guidelines on the issuance of securitized tokens are a pilot "exception" given within this strict regulatory framework. Looking back at a series of regulatory documents issued in China from 2013, 2021, to November 2025, you'll find that Document No. 42 didn't actually add many new restrictive categories in terms of the "breadth" of regulation. However, from our industry perspective, the "depth" of regulation has significantly increased compared to before. The document precisely addresses issues such as the verification of business registration information, the sales details of cryptocurrency mining farms within China, and the regulations for issuing stablecoins pegged to the RMB. Previously, some areas might have seemed vague, but now regulators have a very thorough understanding of the practical details of the crypto world in Chinese-speaking regions, including specific business processes. Based on this, it hasn't worsened the environment; instead, it has opened a loophole through the China Securities Regulatory Commission (CSRC) document, allowing domestic assets to be issued as security tokens overseas with the approval of domestic regulators. Regarding the terms "Real-World Asset Tokenization (RWA)" and "Security Tokenization," many industry professionals find it somewhat strange. Document No. 42 discusses RWA, while within the CSRC's framework, it becomes security tokenization. In reality, RWA is a higher-level concept. As of 2026, global RWA practices have evolved into three main paths: The first is the tokenization of securities or financial products, which is the area primarily regulated by the China Securities Regulatory Commission (CSRC), including attempts by US stocks, funds, and other assets to address secondary market liquidity on-chain; the second path leans more towards product sales, membership benefits, or user points-based activation, following an e-commerce logic. This part, excluding financial fundraising, has not yet received clear regulatory evaluation. The third approach is a path with distinctly Chinese characteristics. This involves companies like Ant Financial, Langxin, and GCL, which began experimenting with this approach in 2024. They package the revenue rights of domestic new energy assets into fixed-income or investment income distribution products for sale in Hong Kong. The China Securities Regulatory Commission's (CSRC) Document No. 1 formally brought products involving "securities" and "debt" attributes into the regulatory framework of mainland government departments. My understanding is that the CSRC only focuses on the tokenization of securities, a lower-level scenario of RWA; other product tokenization is not within its jurisdiction. In Document No. 42, one detail has attracted significant attention from many payment companies and financial institutions: stablecoins. A document from November 2025 defined stablecoins as a form of virtual currency, leading many institutions to believe that the path for domestic companies to issue offshore RMB stablecoins was blocked. However, Article 1, Paragraph 1 of Document No. 42 explicitly states that RMB-pegged stablecoins cannot be issued without consent. This implies that with the approval of relevant departments in accordance with laws and regulations, it is actually possible. This is essentially a boon for giants like Ant Group and JD.com, which have already established a presence in the Hong Kong stablecoin market. Currently, there are 36 institutions applying for stablecoin licenses in Hong Kong, and reports suggest that the first batch of licenses may be issued to Standard Chartered or HSBC by the end of March 2026. Why are stablecoins so important? Because true RWA (Real-World Asset Management) will inevitably require stablecoins in the future, as the core advantage of blockchain lies in its programmability. The ideal scenario is: business data is recorded on the blockchain in a real and immutable manner through IoT chips, and investors' returns are automatically allocated to their accounts through smart contracts based on this data. This closed loop of "information flow" and "capital flow" can achieve regular interest distributions similar to BlackRock's US Treasury products. Without compliant stablecoins participating in value settlement, the financial innovation significance of RWA is halved. Although policies have released signals, we must be soberly aware of the current practical gap. Currently, many RWA projects emerging in Hong Kong, besides new energy-related targets, still focus on agricultural products, non-performing assets, or real estate. The due diligence process for the ownership of these underlying assets is often rather crude, even bordering on haphazard. In many RWA projects linking Hong Kong and the mainland, the logic remains largely the traditional fund product sales model combined with blockchain recording capabilities. Fundraising still follows traditional contract signing and qualified overseas investor channels, ultimately lending to the domestic project company. This approach deviates significantly from the ideal of free flow of RWA tokens on the blockchain in the Web3 world, and is more of a PR campaign using the blockchain concept. The most criticized aspect of the current Hong Kong model is the lack of liquidity in the secondary market. After assets are sold to qualified investors, there is virtually no place for transfer between retail investors and qualified investors. To address this pain point, some micro-innovations based on staking logic have emerged in the industry. For example, investors stake their non-transferable RWA token holdings and then issue a pegged bearer token on the blockchain for secondary trading. While this method can circumvent some restrictions, it is currently clearly in a regulatory vacuum. Regarding the "specific financial infrastructure" mentioned in Document No. 42, which is of great concern to everyone, there are currently three main speculations within the industry. First, there's the cross-border payment and settlement system based on Digital Yuan 2.0, as we hope for more application scenarios for the digital yuan overseas. Second, there are government-led consortium blockchain projects, such as Shanghai's "Pujiang Digital Chain." Finally, there are specific public chains with compliance backgrounds, such as Conflux, which has a strong presence in Shanghai, or Layer 2 chains like HashKey Chain that prioritize compliance. In summary, while the issuance of the CSRC's Document No. 1 is progress, the steps may not be particularly large. For projects led by the CSRC, stability will always be the top priority. For listed company clients who want to try RWA, my advice is to "wait and see." We can wait for the first batch of truly compliant cases to emerge, observe their circulation in the secondary market, compliance costs, and actual financing efficiency before making a business assessment. After all, the road to Web3 is long, so there's no need to rush.