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Interview with Independent Developer Haole: Working in Big Tech by Day, Building Dreams on the Blockchain by Night | Base Builder Talk
The announcement that EOS has been rebranded as Vaulta and is transitioning to become a Web3 bank has stirred up many OGs in the crypto community. From ICOs, DeFi Summer, GameFi, NFTs, to meme coins, the narrative shift in the crypto world has once again reaffirmed its brutal yet romantic nature.
In this edition of Base Builder Talk, our guest is Haole, the developer of the Farcaster protocol client Recaster. He has witnessed the rise and fall of Steemit, the first decentralized social media platform, experienced the frenzy of DeFi Summer, and, amidst the prophecy of AI devouring everything, has chosen to develop independently, navigating outside the mainstream to diligently build the applications he needs and believes in.
This stems not only from his pure passion for technology but is deeply rooted in a philosophical inquiry: whether to accept data nourishment within the comfortable centralized "matrix" or to choose the red pill leading to data sovereignty in the "real world." In the current age of the AI tidal wave and Web2 giants fortifying data barriers, Haole's persistence appears particularly commendable.
Building a product is not just about solving specific problems but also about embodying the open network ideal of "data belonging to users," injecting a counter-current of resistance and humanistic warmth into a digital world increasingly monopolized and defined by algorithms. His story encapsulates the sobriety and steadfastness of a technological idealist amidst the clamor of the crypto wave.
Below is the full interview:
BlockBeats: Please introduce yourself and share what led you into the crypto space.
Haole: I am currently a developer at a small factory in North America. Around 2016, I entered the crypto space when I needed to transfer money between China and the U.S. I found the traditional channels very cumbersome, with layers of verification and slow transfer speeds, realizing that the hard-earned money did not truly belong to me. This realization led me to learn about Bitcoin, read related books, and explore more and more crypto projects.
Using Bitcoin for cross-border transactions between China and the U.S. was very risky due to high volatility. There was a project called BitShares, which was a first-generation decentralized exchange. It had RMB gateways, reducing volatility and making deposits and withdrawals very convenient.
Because of this project, I became a fan of BitShares' founder, BM (Daniel Larimer), and delved into BitShares, Steemit, and EOS.
Related reading: "From Steemit to friend.tech: Tracing the 7-year Evolution History of SocialFi"
In the following cycles, I have been involved in ICOs, DeFi, NFTs, and Memes. However, I have always played in my spare time and have not joined any blockchain companies. Mainly because I feel that this industry has a strong speculative element, with too few long-term projects, and companies die too quickly.
BlockBeats: Didn't you become a scientist?
Haole: During the DeFi Summer period, I was also considered half a scientist, played around with some scripts, but later found that the time cost was high, and holding Bitcoin was more profitable. After going through these cycles, I also realize more that holding Bitcoin is the best strategy with the highest cost-effectiveness.
BlockBeats: Over the past year or two, from Recaster to Modbot, then to Newcaster, and a payment product, which projects have you been involved in part-time?
Haole: This year, I have mainly worked on Recaster, a client based on the Farcaster protocol. Modbot and Newcaster are tools in the Farcaster ecosystem, and I have not invested too much time in them.
As for the payment product you mentioned, called Depal, it is a cryptocurrency-based payment platform that only I am currently using.
Creating this product was to solve a KYC + fee problem. Exchanges like Coinbase are similar to traditional channels, charging a percentage of the payment amount, but the actual transaction cost is only a few cents. With large volumes, there is still a significant profit margin.
However, this product can only be considered a toy. To truly commercialize it, trust and a profitable business model need to be addressed.
BlockBeats: Apart from solving your own needs, do you also aim to accumulate project experience by creating these products?
Haole: There are mainly two purposes. One is to solve my own needs and create a product that satisfies me. If it can help others, I would be even happier. The second is to learn a new technology stack to use in my full-time work, which can be seen as Web3 empowering Web2.
BlockBeats: Using Web3 to give back to Web2 is quite interesting. You mentioned in a statement that the average engineer entering the crypto industry can make money. Now everyone thinks AI is the way to go, that the crypto industry is too chaotic and not promising, but bias actually signifies opportunity. Looking back on this cycle, are you still satisfied with your initial judgment?
Haole: That tweet was actually posted in early 2024, right before the start of the bull market. At that time, everyone was chasing the AI trend, and the cryptocurrency industry was relatively quiet. The subsequent price increase from $30,000 to $40,000 indeed proved this point, showing that biases can lead to opportunities and profits. However, the recent market reversal has revealed that AI is the real deal.
BlockBeats: Was that around the time when the Bitcoin ETF concept was just starting to be hyped?
Haole: Exactly, that was the timing. The more people view the cryptocurrency industry with a biased perspective, the easier it is to identify undervalued assets. When everyone is going crazy, it's usually a sign that it's time to exit.
BlockBeats: And what were the outcomes?
Haole: In this cycle, Bitcoin performed quite well, but during the meme season and FOMO phase, I experienced some losses. This cycle has once again proven that ordinary people are only suitable for holding Bitcoin. Meme coins are all worthless coins with no underlying value, and coins with no value ultimately go to zero.
Development Practices and Ecosystem Consideration of the Farcaster Client
BlockBeats: Why did you decide to develop a client for the Farcaster protocol?
Haole: Bitcoin solved the problem of private property rights, but when it comes to data ownership, there isn't a good solution. Web2 social platforms profit from user data; although they allow you to download your data, you can't access all platform data. Yet, platforms can utilize global data to create data monopolies. In the AI era, platforms like Reddit, X, and Xiaohongshu are further restricting their APIs, strengthening their data barriers.
Decentralized social platforms are an attempt to address this issue. Due to network effects, it's known to be difficult, but since there are teams actually working on it, I'm willing to participate and support the effort.
Currently, Farcaster seems to have the most funding and the most practical technology team. They have been working for 3-4 years, the founder enjoys interacting with the community, and the team has weekly product iterations. They are one of the few teams in the crypto industry focused on the long term, so I prefer to contribute to Farcaster.
Recaster Custom Logo
BlockBeats: So you were in a traditional tech company, working within that value system and ruleset, and then you also had this Open Network, data belongs to everyone kind of mindset in your head. Did they not clash in your mind?
Haole: It's because I saw too much of Web2, where everyone makes money by monopolizing information, so I felt there should be another way to disrupt or restrict. Just like how Bitcoin can hedge against the overissuance of fiat currency, decentralized social platforms are also a hedge against the information monopoly of these large tech industry giants. Although progress is difficult, this is the right direction worth long-term investment.
BlockBeats: Farcaster co-founder Varun once said in an interview that building applications and communities is really, really difficult. It took a team of 20 people a year to build Warpcast. It's unrealistic to expect other teams to fully commit to Farcaster's development from the start and invest 100% without users. How much have you invested in this development process? Time, energy, funds?
Related Reading: "Farcaster Co-founder Interview: Exploring the Future of Decentralized Social Networks"
Haole: They needed to develop the protocol layer, front end, back end, and mobile end simultaneously, so the cost was relatively high. The community now has Neynar providing the backend API, and my development focus is mainly on the mobile end. I haven't invested much time, mainly using weekends and evenings. In the early stages, I invested approximately 20-30 hours per week, now it's less, around 10 hours, and it's been going on for almost a year.
Funding-wise, I haven't hired anyone; I've been independently developing. The main expense is Neynar's service fee, $250 a month, plus miscellaneous server costs, keeping the overall monthly cost below $300, which is quite cheap.
BlockBeats: BlockBeats: Supercast (another frontend application of the Farcaster protocol) is now considered to have been acquired, and the founder Woj has also joined the Farcaster protocol team. How do you think Recaster's future will unfold?
Haole: Currently, Farcaster has very few daily active users (DAU), and without funding, it's challenging to sustain a full-time team of over 2 people. The acquisition of Supercast is considered a good outcome.
Recaster is quite unique; as mentioned earlier, it has very low costs, does not require funding, and has no commercialization needs. I am only responsible to myself and only want to polish it into a product that satisfies me. As long as the Farcaster protocol remains alive, Recaster will continue to exist.
If one day Recaster becomes popular with many users, reaching 10,000 to 20,000 daily active users, I might consider full-time development.
BlockBeats: How do you interpret the Farcaster protocol developing its own client behavior?
Haole: It's quite good, and I agree with it. Many say the Farcaster team lacks the blockchain spirit and cannot build protocols. But the fundamental issue now is not the protocol; it's about how to bring more people into the decentralized world. A slightly centralized pragmatic approach is actually better in the early stages. However, the Farcaster protocol is open enough; for most core functions, I don't need official permission to develop.
BlockBeats: How do you see the competitive relationship between Warpcast and Tako, the other frontends of the Farcaster protocol?
Haole: It's hard to say there's competition; everyone is small and looking for their product-market fit. Any team exploring decentralized social platforms should be supported and encouraged. Our real opponent is the Web2 data monopoly platforms, and I often communicate with the Tako team, helping each other.
BlockBeats: Throughout this process, you have always persisted as a lone wolf, which is truly remarkable.
Haole: Because my costs are low, and I am currently not focused on profitability, I just want to do something meaningful. If I were to form a team, think about making money, it would create pressure, making it harder to persist.
BlockBeats: Have you ever thought about the failure of Recaster? What would be the reason for not being able to continue?
Haole: As long as the Farcaster protocol is alive, this product will be too, because my costs are too low. The annual maintenance cost is less than $5000, and the Farcaster team has provided $10,000 in grants. Even without spending money, it's enough to sustain for another two years. If I can't continue, it can only mean that the Farcaster protocol itself is dead.
The Evolution of Developers in the AI Wave
BlockBeats: You have expressed on social media how AI has helped you. What is your biggest insight during this AI wave?
Haole: AI will eventually replace programmers. Its development and execution capabilities have already surpassed those of most people. I can only say that I understand the constantly emerging new requirements in reality better than AI does.
BlockBeats: So, can we say that the role of a product manager will surpass that of an engineer responsible for execution and implementation?
Haole: Perhaps in the future, AI can proactively identify needs and directly help people achieve them. Both product managers and implementation engineers may have the same fate.
However, there is one thing that AI can never replace—the relationships and communication between real people. The real-world problem is that unless you meet offline, in the online world, it's hard to tell which accounts belong to real individuals.
BlockBeats: How do you view the combination of AI agents and Crypto? Some say that in the future, AI in social media will have its own identity, combined with a Crypto payment system, making it indistinguishable from a real person. This virtual world will then become very interesting, and some investors have mentioned the resurgence of the metaverse.
Haole: I still prefer the real world. Just like in "The Matrix," choosing the red pill or the blue pill, I would choose the red pill. The path of reality comes with pain, imperfection, but it's genuine, showing the value of human life.
BlockBeats: Having this kind of passion is still very helpful for product development.
Haole: Yes, especially when you have children. After years of hard study, coming out and not being as good as AI, it's a very sad thing. What is the meaning of one's existence?
BlockBeats: So what is your answer to this question?
Haole: I haven't come up with an answer yet. I've just been thinking all the time, perhaps it's a human weakness, greed, fear, anger, sorrow, that can bring different brilliance to this world...
BlockBeats: Looking forward to you sharing your answer online in the future.
The Survival Philosophy of Indie Developers
BlockBeats: You have spent 10 years in the United States. Do you think there are any differences in developer culture between the U.S. and China?
Haole: Many students are starting their own businesses, and I often help them with their projects and provide oversight. Chinese engineers are indeed excellent, strong in technology and very hardworking. Domestic teams use Feishu for remote collaboration, which is highly efficient, much better than Slack. However, entrepreneurship in China is more practical. People mainly come together to make money, with fewer idealistic individuals. Teams like the recently emerged Deepseek team are quite idealistic, but maybe after everyone has made enough money, they will pursue something else.
BlockBeats: After three cycles, what are some of the differences you have noticed in different developer ecosystems?
Haole: In 2016 and 2017, when I first entered the field, my faith was not firm enough. I entered and exited the circle several times, so my impression of the developer ecosystem is not particularly deep. The DeFi Summer was the most exciting year, with many projects that were eye-opening. It turned out that blockchain could do this (although in the end, it was found that they did not solve any practical problems). In this cycle, there is almost no excitement. The crypto industry has become an extension of the U.S. dollar hegemony, becoming a laborer for the dollar.
BlockBeats: So, do you now only have faith in Bitcoin in terms of blockchain?
Haole: Making data more open is also a belief.
BlockBeats: Are there any experiences from independent developers that can be shared with other developers in the blockchain industry?
Haole: Strictly speaking, I am not a true independent developer. Although I am independently developing in form, true independent development should refer to a full-time and commercially viable model. In my current situation, which is not profit-oriented, I am not suitable as an example. True independent developers must find PMF (Product-Market Fit). Only when your product gains market acceptance and users are willing to pay for it, can it be considered a true achievement of independence.
However, from the perspective of tangible returns, trying to make big money through independent development may not be the optimal choice. Although there are success stories, when factoring in probabilities, it is overall far less stable and reliable than joining a large company.
If you really want to pursue independent development, you must control costs. Do not blindly spend money, and the importance of marketing outweighs writing code. Truly good products require time to refine—whether it be a year, two years, or even five years— the value of time investment is the best moat.
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China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk
Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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