Chinese regulators have expanded their crackdown on cryptocurrency activity, imposing strict regulations on tokenization and stablecoin issuance in a notice on Friday.
A notice jointly issued by eight national agencies including the People’s Bank of China and the China Securities Regulatory Commission stated that recently, due to a variety of factors, speculative activities such as virtual currencies and physical asset tokenization have occurred frequently, bringing new challenges and new situations to risk prevention and control.
The notice reiterates China’s blanket ban on cryptocurrencies, saying it involves the trading, issuance or promotion of transactions in digital currencies such as Bitcoin. Ether or a stablecoin like Tether’s USDT is illegal.
The ban applies to foreign entities and individuals providing such services within China. It also prohibits domestic entities from issuing digital currencies overseas without regulatory approval.
The notice singled out stablecoins (cryptocurrencies pegged to fiat currencies) for special scrutiny. Authorities believe that stablecoins replicate key functions of sovereign currencies and therefore threaten currency control.
The new rules clearly stipulate that no entity, whether Chinese or foreign, may issue yuan-pegged stablecoins offshore without government approval. This includes overseas branches of domestic companies.
The rules also tighten controls on tokenization, the fast-growing trend of converting ownership of real-world assets such as stocks, real estate or funds into digital tokens.
Chinese companies that want to tokenize assets overseas must now obtain regulatory approval or file with regulators, and their financial and technology partners must also meet higher compliance standards, the notice said.
China’s crackdown on cryptocurrencies and related activities has been a staple over the past few years. This new set of rules builds on Chinese authorities outlawing all cryptocurrency-related business activities and banning cryptocurrency mining in 2021, often referred to as the “China Ban.” In 2017, authorities banned initial coin offerings (ICOs), labeling them illegal fund-raising and financial fraud, and ordered domestic cryptocurrency exchanges to shut down fiat and cryptocurrency trading.
Read more: China Never Banned Cryptocurrencies Outright
