Seven major Chinese financial industry associations have now reclassified Real-World Asset (RWA) tokenization as a “risky” and illegal financial activity, warning that these projects lack regulatory approval and pose material threats to financial stability. Our assessment is that this is a hard perimeter decision: the category is being treated as prohibited activity, not as an innovation track awaiting rules.
The notice was issued jointly by associations that include the National Internet Finance Association of China, the China Banking Association, and the Securities Association of China. Operationally, the most consequential element is the explicit warning that mainland staff supporting offshore providers can be exposed to legal accountability, which meaningfully raises cross-border execution risk and forces immediate operating-model reassessment.
Scope expansion: RWAs plus broader virtual-asset activity
The statement does not isolate RWAs as a narrow concern; it casts a wide net across virtual-asset activity and explicitly extends scrutiny to stablecoins, tokens described as lacking intrinsic value (“air coins”), and crypto mining. By grouping these areas together, the regulators’ ecosystem message is consistent: RWA tokenization is being aligned with a broader anti-crypto posture rather than treated as a differentiated product category.
The associations lay out a set of risks they view as central to the prohibition: fraudulent underlying assets that misrepresent collateral or cash flows; custody, settlement, and governance failures; speculative market structures that amplify leverage and volatility; and illegal fundraising that may resemble unauthorized financing or public securities issuance. This risk framing is structured to shift the debate from “technology potential” to investor harm, systemic stability, and enforceability.
They also flag cross-border circumvention risk—capital flight and money laundering channels—as a core concern. That is a critical signal because it positions tokenized RWAs as a capital-controls and financial-crime issue, which typically triggers a more aggressive enforcement posture.
Enforcement posture and cross-border implications
The associations’ position is that RWA tokenization lacks approval from Chinese financial regulatory authorities and therefore carries significant legal consequences for domestic and overseas operators who facilitate or support these projects. The language is categorical: RWA tokenization is described as “risky” and “unequivocally illegal financial activity.” That eliminates any practical “gray zone” for firms trying to operate with mainland touchpoints.
From an operating-model standpoint, the mainland personnel warning is the pressure point that changes everything. If mainland employees can face accountability for assisting offshore RWA projects, then staffing, vendor selection, technology support, and even routine back-office functions become potential risk vectors. This is especially relevant for Hong Kong-linked strategies, because it complicates how firms allocate work across the SAR and the mainland.
The statement also implies a tightening perimeter against unapproved offshore pathways, echoing the broader tone of earlier anti-crypto measures referenced in the text. The implication is that firms should assume stricter enforcement expectations, not gradual accommodation.
What we do next: controls, product gating, and client strategy
For market participants, custodians, and service providers with Hong Kong or China exposure, the immediate response should be structured and controls-led. We should treat tokenized RWA offerings with any mainland operational dependency as high-risk until proven otherwise under defensible legal guidance.
Practically, that means reassessing product roadmaps, legal opinions, client onboarding policies, and internal delivery models. Any arrangement where mainland-based staff provide support, customer service, engineering, treasury operations, or compliance coverage for RWA tokenization initiatives should be stress-tested for enforcement exposure. If the objective is to maintain optionality, the only viable posture is strict ring-fencing and documented governance boundaries—recognizing that the stated direction is exclusion, not integration.
