In a coordinated enforcement action, seven prominent Chinese financial associations have declared real-world asset (RWA) tokenization illegal, marking one of the country's most comprehensive regulatory moves against the burgeoning Web3 sector. The sweeping ban classifies RWA tokenization as unauthorized securities activity and extends liability across the entire blockchain service ecosystem, signaling Beijing's continued hardline stance on cryptocurrency-related innovations.
China has escalated its regulatory crackdown on digital assets with seven major financial associations jointly banning real-world asset (RWA) tokenization, a move that could significantly impact the global Web3 industry's trajectory.
The unprecedented coordinated action by these influential industry bodies classifies RWA tokenization as illegal financing activity under existing Chinese securities law. This declaration represents one of Beijing's most comprehensive regulatory interventions in the blockchain space since the 2021 cryptocurrency mining ban.
What makes this announcement particularly significant is the establishment of joint liability provisions that extend responsibility throughout the entire Web3 service ecosystem. This means that not only token issuers but also platforms, intermediaries, and service providers could face legal consequences for facilitating RWA tokenization activities.
Real-world asset tokenization has emerged as one of the most promising use cases for blockchain technology, allowing traditional assets like real estate, commodities, and securities to be represented as digital tokens on distributed ledgers. Major global financial institutions, including BlackRock and JPMorgan, have been actively exploring RWA tokenization as a bridge between traditional finance and decentralized systems.
China's latest ban underscores the growing regulatory divergence between the Asian economic powerhouse and Western nations on blockchain innovation. While the United States and European Union are developing frameworks to regulate and integrate tokenized assets into their financial systems, China continues to maintain strict capital controls and limitations on cryptocurrency-related activities.
The announcement comes amid increased global interest in RWA tokenization, with the sector's total value locked reaching approximately $13 billion according to recent industry estimates. China's decision to classify these activities as illegal could force domestic projects to relocate operations offshore or cease operations entirely.
For the global crypto industry, China's stance serves as a reminder of the regulatory fragmentation that continues to characterize the digital asset landscape. Companies operating internationally will need to carefully navigate varying jurisdictional requirements, with China's restrictive approach representing one extreme of the regulatory spectrum.
As Web3 adoption accelerates worldwide, China's latest prohibition highlights the ongoing tension between technological innovation and regulatory control in the world's second-largest economy.