In-Depth Analysis of China's Latest Virtual Asset Regulatory Guidelines: Paradigm Reconfiguration and Strategic Significance Under the "Blocking and Facilitating" Approach

1. Comprehensive Upgrades and Precise Qualification: Blocking All Paths to Systemic Risks

This “Notice” first demonstrates an unprecedented strategic expansion of the regulatory scope and a strengthening of qualitative enforcement. Its most notable feature is explicitly incorporating “Real-World Asset Tokenization” (RWA) into the core of regulation and subjecting it to the same strict scrutiny as virtual currencies. This move is forward-looking and decisive. RWA, as a global fintech trend that digitizes and trades traditional assets (such as bonds, real estate income rights, commodities, etc.) via blockchain, is essentially an iteration of asset securitization technology. If left unchecked, it could evolve into a “technological dark channel” that bypasses existing securities issuance review, disclosure requirements, and investor suitability regulations, breeding more complex issues like illegal fundraising, fraud, and cross-infection of financial risks. The “Notice” clearly states that engaging in unauthorized RWA activities within the country—such as illegal issuance of tokens or securities, unauthorized securities offerings, or illegal futures operations—constitutes illegal financial activities. This qualification effectively closes any illusions of “regulatory arbitrage” under the guise of “technological innovation,” establishing the fundamental principle that “regardless of technological form, financial activities must be licensed and regulated.”

Meanwhile, the “Notice” takes a more resolute and thorough stance on existing risks. It not only reaffirms the non-monetary nature of virtual currencies like Bitcoin but also innovatively considers “stablecoins pegged to fiat currency” as “de facto performing some functions of legal tender,” and strictly prohibits any unauthorized issuance of RMB-pegged stablecoins. This clause demonstrates strategic foresight, aiming to preempt any potential challenges to the sovereignty of the RMB or the construction of parallel settlement systems in digital space. By categorizing virtual currency-related activities—including exchange, market-making, information intermediaries, derivatives trading, etc.—as “illegal financial activities” and abolishing the 2021 old notice, regulators send a firm message of zero tolerance for existing risks and no room for ambiguity.

2. Building a Full-Chain Penetrating “Firewall”: Multidimensional Isolation from Funds to Information

If qualification is a declaration of stance, then the regulatory enforcement framework built in the “Notice” reflects a powerful systematic ability to turn stance into reality. It deploys a comprehensive, penetrating regulatory network covering “fund flows, information flows, and technology flows,” aiming to physically isolate risks.

On the fund flow level, the requirements are unprecedentedly strict. All financial institutions and non-bank payment agencies are completely prohibited from providing any services related to relevant activities—from account opening, fund transfers, clearing, and settlement, to product issuance, collateral inclusion, and insurance operations—effectively shutting down financial channels. This is akin to severing the “umbilical cord” between digital assets and the mainstream financial system, preventing legitimate liquidity input and credit support.

On the information flow and marketing side, regulation is synchronized both online and offline. Online, internet companies are strictly forbidden from providing online venues, commercial displays, marketing, and paid traffic, and are required to report leads and provide technical assistance proactively. Offline, market regulators are prohibited from using terms like “virtual currency” or “RWA” in company registration names and business scopes from the source, and advertising is strengthened. This combination aims to eliminate the “visibility” and “legitimacy hints” of digital assets in the public domain, reducing speculative enthusiasm and participation from the social perception level—an in-depth psychological risk prevention measure.

At the technical and physical layer, efforts to regulate virtual currency “mining” activities continue to deepen, with clear responsibilities assigned to provincial governments, banning new projects and cleaning up existing ones. More critically, the policy innovatively introduces a “Overseas Service Blockade” clause. It explicitly states that “overseas entities and individuals shall not provide virtual currency-related services to domestic entities in any form,” and stipulates accountability for domestic facilitators. This extraterritorial clause, combined with strict control over cross-border payment channels, effectively creates a “financial digital border” for the global internet, serving as a strong legal deterrent against any overseas exchanges or DeFi protocols attempting to serve Chinese users.

3. Opening the Only “Compliance Narrow Gate”: Strategic Intent of the CSRC’s “Guidelines”

While the “Notice” builds a high wall, the CSRC’s “Guidelines” carefully design and open a highly restricted but significant “door.” This door leads only to a specific destination: allowing the issuance of asset-backed securities (ABS) tokens supported by domestic assets or cash flows, issued abroad.

This is not a leniency towards virtual currency speculation but a precise “guidance” with high strategic intent. First, its business model is strictly limited: the underlying assets must be stable cash-flow-generating domestic real assets or their income rights (such as infrastructure fee rights, trade receivables, leasing assets, etc.), and the issued tokens must be compliant with financial logic. The issuance market and investors are strictly confined to overseas. This ensures that this innovative activity remains closely tied to the real economy, serving the genuine cross-border financing needs of enterprises, and is fully isolated from the domestic retail speculative market.

Second, its regulatory approach is extremely strict: adopting a “domestic entity pre-filing with the CSRC” model rather than simple post-reporting. The filing entities must submit comprehensive offshore issuance documents and undergo a penetrating review of the authenticity of underlying assets, compliance of transaction structures, and effectiveness of risk isolation. This approach intervenes earlier and more deeply than traditional offshore bond issuance or listing, embodying the regulatory philosophy of “same business, same risks, same rules,” ensuring that innovation remains within regulatory oversight.

The opening of this “narrow gate” carries at least three strategic purposes: first, serving real economy financing—creating pilot channels for high-quality domestic enterprises to leverage blockchain technology to improve cross-border asset securitization efficiency and reduce costs, directly empowering fintech to support the real economy; second, accumulating regulatory experience and talent—within a controlled “overseas sandbox,” regulators, financial institutions, and legal intermediaries can closely observe, understand, and manage the full process of asset tokenization, preparing for future larger-scale financial digital transformation; third, shaping international rules—by proactive regulation and practice, China can gain influence in the global frontier of asset tokenization, avoiding passivity in future international rule-making, a strategic move in great power financial competition.

4. The Emergence of a “Dual-Track” Ecosystem and Global Regulatory Divergence

The combined effect of the “Notice” and “Guidelines” will profoundly shape China’s future digital financial ecosystem and may accelerate divergence in global regulatory patterns.

Within China, a clear “dual-track” digital financial ecosystem is emerging. The first track is a “completely closed retail track”: all transactions, financing, and derivatives activities related to cryptocurrencies and speculative tokens targeting domestic retail investors will be permanently and thoroughly banned, forming an “internal cycle” largely isolated from the global public blockchain-led crypto ecosystem. The second track is a “limited open institutional and cross-border track”: applications based on consortium or permissioned blockchain technology, aimed at serving the real economy and cross-border capital flows, will be encouraged and developed. The digital RMB (e-CNY) development and application, along with future state-led blockchain infrastructure for specific financial asset registration, trading, and settlement, will be the core pillars of this track. RWA innovation can only be strictly conducted within the second track, following the path outlined in the “Guidelines.”

From a global perspective, China’s regulatory path diverges fundamentally from the approaches of the US, EU, and other major economies, which are exploring “bringing crypto assets into existing securities or commodities regulatory frameworks” for compliance. China has chosen a unique model of “sovereignty priority, risk isolation, and pilot innovation.” This approach is driven not only by financial stability considerations but also by safeguarding core national interests such as monetary sovereignty, capital account management, data security, and cross-border flows. This divergence suggests that the global digital asset market may fragment further, forming regional markets with differing standards, asset classes, and investor profiles. China’s approach offers an alternative regulatory paradigm for emerging economies emphasizing financial sovereignty and control.

5. Deep Impact and Future Outlook: Red Lines and Navigation Routes Redefined

In summary, the policy suite released in early 2026 has profound and complex implications. For market participants, it signals a definitive “clearing out.” All domestic operations related to virtual currencies and unapproved digital assets will have no room to survive, and individual participation faces high legal and financial risks. The illusion of “policy easing” is no longer realistic. The only true opportunity lies in one path: abandoning short-term speculative thinking, deeply understanding national strategic intentions, and engaging in long-term, arduous technological and model innovation aligned with serving the real economy, complying with cross-border capital management policies, and relying on officially recognized technological pathways.

At the national strategic level, this policy combination is an active “de-mining” and “foundational” effort for financial infrastructure. It rigorously clears weeds that could threaten core financial stability, erode monetary sovereignty, or trigger social risks, paving the way for the next step—“sowing” autonomous, controllable national financial digital infrastructure. The strictest bans often foreshadow the most cautious preparations. It is foreseeable that China’s future focus in blockchain finance will center on areas led by the “national team,” such as central bank digital currencies, trade finance blockchain platforms, and standardized asset digitization and trading.

Ultimately, this policy set redefines China’s red lines in the turbulent global digital financial revolution—namely, national security, financial stability, and the safety of people’s assets—and clarifies the navigable routes: technology must empower the real economy, innovation must be subordinate to regulation, and development must serve strategic goals. It proclaims that China will shape its digital financial future independently and according to its own logic. This new paradigm is not only a regulatory upgrade but also a profound strategic choice in national finance, with impacts expected to persist for the next decade or longer.