China bans another emerging tech after blanket crypto ban

Core Viewpoint - Beijing has intensified its crackdown on cryptocurrencies, particularly focusing on the illegal activities surrounding real-world asset (RWA) tokenization, which has now been explicitly prohibited alongside other crypto activities [1][3]. Group 1: Regulatory Actions - The People's Bank of China (PBoC) has reiterated that virtual currencies do not hold legal status and cannot be used as currency in the market [1]. - In December, seven major financial associations in China declared all RWA tokenization activities illegal, marking a significant regulatory step against this emerging sector [3]. - The coalition of financial associations last mobilized in September 2021 to enforce a ban on exchanges and mining, which drastically reduced China's Bitcoin hashrate from approximately 75% to nearly zero [4]. Group 2: Risks and Concerns - Authorities have expressed concerns that RWA tokenization could lead to serious risks, including the potential for fake assets, project failures, and speculative trading [5]. - There is apprehension that tokenized assets might facilitate capital flight, allowing domestic holders to convert traditional assets into digital tokens and transfer them offshore, circumventing banking and foreign-exchange controls [5]. Group 3: Legal Status of Virtual Currencies - The December notice emphasized that all virtual currencies, including stablecoins, lack legal status and are prohibited from circulation within mainland China [6]. - Individuals and organizations are banned from issuing, exchanging, or raising funds using tokens or stablecoins, even if the issuing company is based offshore but employs staff in China [6].