China's cryptocurrency regulation upgrade prohibits the issuance of RMB stablecoins abroad without consent

The mainland authorities have upgraded the regulation of virtual currencies, with eight departments issuing a "Notice" that once again clarifies that activities related to virtual currencies are considered illegal financial activities, and it is explicitly stated that without consent, no entity or individual may issue RMB stablecoins abroad. The People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, and other eight departments pointed out that recent speculative activities related to virtual currencies and the tokenization of real-world assets (RWA) have occurred frequently, disrupting the economic and financial order and endangering the property safety of the public. To further improve regulatory policies and prevent and address risks related to virtual currencies and the tokenization of real-world assets, they jointly issued the "Notice on Further Preventing and Addressing Risks Related to Virtual Currencies." First Clear Definition of Stablecoins Pegged to Legal Currency In this "Notice," in addition to reiterating that activities related to virtual currencies are illegal financial activities, it also for the first time clarifies that stablecoins pegged to legal currency have, in their circulation and use, effectively fulfilled part of the functions of legal currency. Without the consent of relevant departments in accordance with laws and regulations, no entity or individual may issue stablecoins pegged to RMB abroad. At the same time, without the consent of relevant departments in accordance with laws and regulations, domestic entities and their controlled foreign entities may not issue virtual currencies abroad. The "Notice" also states that activities related to the tokenization of real-world assets within the mainland, as well as the provision of related intermediary and information technology services, should be prohibited; however, activities that rely on specific financial infrastructure and have been approved by the competent business authorities in accordance with laws and regulations are exceptions. Additionally, foreign entities and individuals may not illegally provide services related to the tokenization of real-world assets to domestic entities in any form; without the consent and filing of relevant departments, no entity or individual may engage in the tokenization of real-world assets abroad. Maintaining a Prohibitive Stance on Virtual Currencies The notice emphasizes that the registered names and business scopes of enterprises and individual businesses must not contain terms such as virtual currencies, virtual assets, cryptocurrencies, crypto assets, "stablecoins," or phrases related to the tokenization of real-world assets, RWA, etc. Officials from relevant departments in the mainland stated that for a long time, there has been a prohibitive policy stance on activities related to virtual currencies. At this stage, virtual currencies cannot effectively meet the requirements for customer identification, anti-money laundering, and other aspects, and there are risks of being used for illegal activities such as money laundering, fundraising fraud, and illegal cross-border fund transfers