China has banned the onshore tokenization of real-world assets under new crypto rules, reinforcing its hard line on digital asset experimentation.
China is tightening the perimeter around digital finance once again.
Under newly clarified crypto rules, authorities have banned the onshore tokenization of real-world assets (RWAs), shutting the door on a class of blockchain-based financial products that has gained traction in global markets.
The move reinforces Beijing’s long-standing position: blockchain technology may be encouraged, but speculative or quasi-financial uses tied to crypto assets remain off-limits.
What the ban covers
Real-world asset tokenization typically involves representing physical or traditional financial assets—such as real estate, commodities, invoices, or bonds—as digital tokens on a blockchain.
Globally, RWAs are often pitched as a way to improve liquidity, transparency, and access to capital. In China, regulators see them differently: as a potential channel for shadow finance, unapproved fundraising, and regulatory arbitrage.
By banning onshore RWA tokenization, authorities are signaling that even crypto-adjacent financial innovation will face strict limits.
Consistent with China’s crypto stance
The decision aligns with China’s broader crypto policy, which has already banned cryptocurrency trading and mining while promoting state-controlled alternatives such as the digital yuan.
Beijing has repeatedly emphasized financial stability and centralized oversight, particularly in areas where retail investors could be exposed to opaque risks.
Tokenized RWAs blur the line between regulated finance and decentralized systems—a line Chinese regulators are determined to keep bright.
Implications for startups and institutions
For blockchain startups operating in China, the ban narrows the scope of permissible experimentation. Projects exploring asset tokenization will need to pivot toward permissioned systems, enterprise use cases, or overseas markets.
Financial institutions, meanwhile, are likely to focus on blockchain applications that improve internal efficiency—such as settlement or record-keeping—without creating tradable digital assets.
The message is clear: innovation is welcome, but only within tightly defined boundaries.
A contrast with global trends
China’s move stands in contrast to developments elsewhere, where regulators are cautiously exploring frameworks for tokenized securities and real-world assets.
That divergence highlights a growing fragmentation in global digital finance. What is considered a promising innovation in one jurisdiction may be viewed as systemic risk in another.
For now, China is choosing control over experimentation—prioritizing stability over participation in one of crypto’s fastest-growing segments.
As global finance becomes more tokenized, that choice will continue to shape how—and where—blockchain innovation takes root.
