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The Year Trump Embraced Cryptocurrency
Original Article Title: What Trump’s Embrace of Crypto Has Unleashed
Original Article Author: David Yaffe-Bellany, Eric Lipton, The New York Times
Translation: Peggy, BlockBeats
Editor's Note: From the "Crypto President's" political endorsement to the rapid spread of DAT Treasury companies, tokenized stocks, and high-leverage trading, the crypto industry is advancing at an unprecedented pace toward the boundaries of traditional finance and public policy. New products, new structures, and new capital paths continue to emerge, portrayed on one hand as a technological breakthrough to improve efficiency and reshape financial infrastructure, while also accumulating concerns on lending, governance, and risk transmission.
As regulatory attitudes become more lenient and capital rushes in, this experiment driven by policy, capital, and technology is gradually transitioning from internal industry issues to structural issues that may affect a broader financial system.
Below is the original article:
This summer, a group of executives presented a business plan to Anthony Scaramucci, a Wall Street financier and former short-lived adviser to President Trump.
They wanted Scaramucci to join a publicly traded company with a rather peculiar strategy: accumulate a large amount of cryptocurrency to make the company more attractive to investors.
"They actually didn’t need to sell me," Scaramucci said. Soon after, he was publicly revealed as an advisor to three previously little-known companies that adopted the same strategy. "The conversation was pretty easy."
However, this enthusiasm did not last long. This fall, the crypto market experienced a significant crash, and the stock prices of the three companies Scaramucci was involved with plummeted, with one of them dropping over 80%.
These companies were part of a wave of crypto enthusiasm driven by Trump. Trump propelled the relatively fringe world of digital currencies to a prominent position in the global economy. He proclaimed himself the first "Crypto President," ending regulatory crackdowns on crypto companies, openly promoting crypto investments in the Oval Office, signing multiple pro-crypto bills, and even launching a meme coin called $TRUMP.
Today, the consequences of this enthusiastic endorsement are becoming apparent.
This year, a series of boundary-breaking new crypto businesses have emerged, exposing more people directly to the highly volatile world of digital currencies. Over 250 publicly traded companies are now accumulating cryptocurrency, and the price volatility of these digital assets mirrors that of traditional investments like stocks and bonds.
Meanwhile, a group of companies has launched new products, making it easier to allocate crypto assets in brokerage accounts and retirement plans. Industry executives are also lobbying regulators to introduce tokens representing shares of public companies and to trade them in a "stock market" driven by crypto technology.
This wave of experimentation has already encountered problems. Over the past two months, major cryptocurrency prices have plummeted, sending companies holding significant amounts of related assets into a tailspin. Other new projects have also raised concerns from economists and regulators, pointing out the accumulating risks involved.
One of the core concerns is the rise of borrowing. By this fall, public companies have used large loans to purchase crypto assets; at the same time, investors have wagered over $200 billion on the future price of coins. These types of transactions often rely on leverage, which can lead to massive profits if successful, but losses can be equally devastating if a mistake occurs.
The latest industry products have further interconnected crypto assets with the stock market and other parts of the financial system, increasing the possibility of a "domino effect," where a crypto crisis could spill over into wider economic sectors.
"The line between betting, speculation, and investment has largely disappeared," said Timothy Massad, who served as Assistant Secretary of the Treasury for Financial Stability after the 2008 financial crisis. "This worries me greatly."
White House Press Secretary Karoline Leavitt stated that Trump is working to turn the U.S. into the "Crypto Capital of the World" by promoting innovation and economic opportunity.
Crypto industry executives believe that these new businesses demonstrate the potential of the technology to reshape the outdated financial system. They see market volatility as a potential source of profit.
"The risks are higher, but the potential rewards are higher as well," said Duncan Moir, CEO of 21Shares. The company issues various financial products to make investing in crypto assets more convenient. "Our job is to bring these investment opportunities to more people."
All of this experimentation has flourished thanks to an unprecedentedly friendly regulatory environment for crypto companies. After years of courtroom battles with the industry, the U.S. Securities and Exchange Commission (SEC) established a crypto special working group in January of this year and has held dozens of meetings with companies seeking new rules or product approvals.
An SEC spokesperson said the agency is working to "ensure that investors have full information to make informed decisions."
The U.S. Securities and Exchange Commission's Washington headquarters established a Cryptocurrency Task Force this year. Image Source: Jason Andrew / The New York Times
Many of these new types of companies have some connection to the expanding crypto empire of the Trump family, further blurring the line between business and government.
This summer, the management of a crypto startup under Trump, World Liberty Financial, announced that they would be joining the board of the publicly traded company ALT5 Sigma. The company previously operated a recycling business but now plans to raise $1.5 billion to purchase digital currencies.
「The Surge」
The crypto community has dubbed this high-risk, high-emotion era ushered in by the Trump administration as "DAT Summer" (DAT standing for Digital Asset Treasury).
A Digital Asset Treasury refers to a publicly traded company whose core objective is to accumulate as much crypto as possible. According to crypto advisory firm Architect Partners, just under half of these newly established companies have chosen Bitcoin as their primary asset, while dozens of companies have announced plans to hoard lesser-known coins like Dogecoin.
Since the beginning of this year, new Digital Asset Treasuries have been established every month, showing a clear upward trend.
Note: Data as of December 16. Source: Architect Partners, The New York Times
These projects often follow a relatively simple operational path: a group of executives first target a low-profile but publicly traded company—such as a toy manufacturer—that intends to build a crypto reserve. Subsequently, this team partners with the company to raise millions of dollars from wealthy investors and uses these funds to purchase digital assets.
The primary goal is to indirectly expose investors to the price fluctuations of crypto assets by having them buy "securities that resemble traditional stocks." This is potentially a profitable business. Some investment funds and asset management institutions have been reluctant to directly invest in cryptocurrencies, partly because the custody process for crypto assets is complex, costly, and frequently targeted by theft and hacking attacks.
By investing in a Digital Asset Trust (DAT), a fund manager can outsource these cumbersome operations. However, DATs have proven to be equally risky. Many such companies were hastily established or are run by executives lacking experience in public company operations. According to Architect Partners, these companies collectively have announced plans to borrow over $20 billion to purchase crypto assets.
“Financial crises often start with leverage,” said Corey Frayer, a former SEC crypto advisor, “and what is being created now is a pile of leverage.”
In fact, some companies have already faced operational challenges or management crises, leading to investor losses. For example, the vault-type company Forward Industries once hoarded a significant amount of a token called Solana. In September of this year, following a fundraising of over $1.6 billion from private investors, its stock price briefly soared to nearly $40 per share.
Among the investors was Allan Teh from Miami, representing a family office investment, who put $2.5 million into Forward this year.
“Everyone at the time believed that this strategy would surely work, and asset prices would keep rising,” Teh said.
However, the market later corrected, and Forward’s stock price dropped to as low as $7 per share this month. The company then announced plans to buy back its own shares for up to $1 billion over the next two years, but this move did not halt the continued decline in the stock price.
“The music stopped. Now I'm starting to hesitate, should I exit?” said Teh, who has already lost around $1.5 million, “How much loss do I ultimately have to bear for these things?” Forward declined to comment on this.
The surge in DATs has caught the attention of the SEC. “Clearly, there is a concern here,” SEC Chairman Paul Atkins said in an interview at a crypto conference in Miami last month, “We are closely watching.”
However, behind this emerging corner of the crypto world, there is a powerful supporter—the Trump family.
Founders of World Liberty Financial include Eric Trump (right) and Zach Witkoff. In May of this year, the two appeared together at a crypto conference in the UAE. Image Source: Katarina Premfors/The New York Times
In August of this year, World Liberty Financial announced that its founding team — including the son of the President, Eric Trump — would be joining the board of publicly traded company ALT5 Sigma. The company plans to heavily accumulate WLFI, a token self-issued by World Liberty. (Currently, Eric Trump is listed as a strategic advisor and observer.)
This arrangement appears poised to quickly benefit the Trump family. According to a revenue-sharing agreement disclosed on the World Liberty website, each time the WLFI token is transacted, a business entity owned by the Trump family can receive a portion of the profits.
However, thereafter, the operational status of ALT5 Sigma began to deteriorate. In August, the company revealed that executives of one of its subsidiaries had been convicted of money laundering in Rwanda, and the board was reviewing other "previously undisclosed issues." Shortly after, ALT5 Sigma announced the suspension of the CEO and the departure of two other top executives.
Since August, the company's stock price has fallen by 85%. A spokesperson for ALT5 Sigma stated that the company still remains "hopeful for the future."
Flash Crash
Most of the recent turbulence in the crypto market can be traced back to one evening in October.
Driven by public support from Trump, the crypto market had been on a continual rise for most of the year. However, on October 10, both Bitcoin and Ethereum prices suddenly plummeted, dragging down dozens of other tokens with them.
This was a typical "flash crash," where prices collapsed sharply in a very brief period.
The immediate trigger was Trump's announcement of new tariffs on China, which sent shockwaves through the global economy. However, the reason crypto asset prices were hit particularly hard was due to the high levels of leverage in the market.
On crypto trading platforms, traders can use their assets as collateral to borrow cash or leverage further to make larger bets on digital currencies. According to data from crypto research firm Galaxy Research, in just the third quarter, the global scale of crypto asset-based lending increased by $20 billion, surging to a record $740 billion.
The most aggressive, high-risk crypto trades typically occur in overseas markets. However, in July of this year, the largest U.S. crypto exchange, Coinbase, announced the launch of an investment tool that would allow traders to borrow funds equivalent to 10 times their holdings to wager on the future prices of Bitcoin and Ethereum.
The background to Coinbase's launch of this product is: Federal regulatory agencies have withdrawn previous guidance restricting such high-leverage lending, making such operations possible again in the United States.
In July of this year, Coinbase announced it would introduce an investment tool that allows traders to borrow up to 10 times their holdings to bet on the price movements of Bitcoin and Ethereum. Photo Source: Gabby Jones/The New York Times
The October sell-off did not trigger a systemic industry-wide catastrophe like in 2022 when several large crypto companies went bankrupt in succession. But it provided a clear preview: a crisis that could engulf the entire crypto world, and how it might unfold.
Mechanically, lending amplifies losses in a downward market. As prices fall, exchanges are forced to sell clients' collateral assets—a process known as "liquidation"—which often further drives down prices.
According to industry data tracking firm CoinGlass, on October 10th alone, at least $19 billion in global leveraged crypto bets were liquidated, affecting 1.6 million traders. Liquidations were primarily concentrated on overseas exchanges, including Binance, OKX, and Bybit.
The sell-off triggered a surge in trading volume, with some traders experiencing technical issues when trying to move funds on major exchanges. Coinbase said some customers experienced "possible delays or degraded performance" during trading.
Derek Bartron, a software engineer and crypto investor from Tennessee, said his Coinbase account was temporarily locked. "I couldn't close my positions if I wanted to," he said. "It felt like Coinbase almost 'locked' everyone in their accounts, losing the ability to self-rescue funds, just forced to ride the rollercoaster."
Bartron said he lost about $50,000 in crypto assets overall in the following days, in part because he couldn't sell his holdings at the desired times.
A Coinbase spokesperson responded that the company provides automated risk management tools, "which functioned correctly, and the exchange remained operational throughout the event."
A Binance spokesperson acknowledged that due to a significant increase in trading volume, the platform "did experience some technical issues" and stated that steps had been taken to compensate users.
Experiment
One summer night this year, crypto entrepreneurs Chris Yin and Teddy Pornprinya arrived at the Kennedy Center in Washington, D.C., for a black-tie gala.
It was a high-profile social affair. Yin, in a tuxedo he had bought the night before, introduced himself to Vice President JD Vance, a former Silicon Valley investor; he and Pornprinya had also spoken with Treasury Secretary Scott Bessent, a former hedge fund manager; and they even got a photo op with Trump, who gave a thumbs-up to the camera.
The two founders were paving the way for another ambitious plan proposed for the industry this year: expanding the underlying technology of crypto into other financial realms.
For months, their startup Plume has been seeking approval from U.S. regulators to launch an online platform that would allow users to purchase digital tokens representing "real-world assets"—assets that could be a company, a farm, or even an oil well.
Plume's co-founders Chris Yin (right) and Teddy Pornprinya appeared at the Empire State Building, also the location of their U.S. office. Image Source: Laila Stevens/The New York Times
In overseas markets, Plume's customers can buy "shares" of these products and trade them like any other tokens. However, this service, known as "tokenization," operates in a legal gray area in the U.S. This is because U.S. securities laws, in place for decades, impose strict regulatory requirements on any form of share sales.
The core purpose of these rules is to protect investors through mandatory disclosures, requiring issuers to provide extensive operational, financial, and risk information. As a result, tokenizing real-world assets for external trading faces a much higher compliance threshold in the U.S. compared to overseas markets.
Plume is attempting to secure approval from U.S. regulators to launch an online platform for tokenization. Image Source: Laila Stevens/The New York Times
This year, tokenization has become one of the hottest concepts in the crypto industry. Industry executives believe that "tokenized stocks" can make stock trading faster and more efficient, creating a 24/7 global market where shares continue to circulate around the world. The large U.S. exchange Kraken has already provided overseas clients with a crypto-based stock trading market.
In the crypto world, trades are recorded on a public ledger, making it more transparent compared to traditional finance, industry executives have stated. "It is traceable, auditable," said Kraken CEO Arjun Sethi, "It's almost the opposite of risk."
Representatives from Kraken and Coinbase have met with the U.S. Securities and Exchange Commission (SEC) to discuss regulatory rules for tokenized assets; meanwhile, Plume is seeking a viable legal path to expand its business to the U.S. mainland.
However, this "race to release" has also raised concerns among current and former regulators, as well as heavyweight executives in the traditional finance sector. In September, an economist from the U.S. Federal Reserve System pointed out that tokenization could transmit the financial shock of the crypto market to a broader economic system and weaken policymakers' ability to maintain payment system integrity during times of stress.
Nevertheless, SEC Chairman Paul Atkins has expressed a positive attitude toward tokenized stocks, calling it a significant technological advancement. In May of this year, he stated at a tokenization industry roundtable, "The Commission has considerable discretion within the securities law framework to make appropriate arrangements for the crypto industry, and I intend to push that forward."
To secure a favorable position, Plume's two founders, Chris Yin and Teddy Pornprinya, are taking multiple approaches: they met with the SEC's crypto special working group in May; provided visual content for a White House crypto report; and established a U.S. headquarters for Plume on the 77th floor of the Empire State Building.
At a black-tie reception in Washington later this summer, Trump's core staff seemed to show appreciation for these two founders.
"They know Plume," Pornprinya said, "Everyone has heard of us."
Weeks later, Plume announced another potential key connection: a business partnership with the Trump family's crypto company, World Liberty.
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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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