China Reaffirms Crypto Ban: Trading & All Related Activities Prohibited

China is doubling down on its restrictions of the cryptocurrency landscape, formally extending its 2021 ban to include stablecoins and the burgeoning field of real-world asset (RWA) tokenization. The move, announced on February 6, 2026, by a coalition of eight national organizations including the People’s Bank of China (PBOC) and the China Securities Regulatory Commission (CSRC), signals a continued hardline stance against decentralized finance and a desire to maintain strict control over its financial system.

Expanding the Scope of the Ban

The initial 2021 ban outlawed cryptocurrency trading within China’s borders. This latest notice significantly broadens that prohibition, explicitly targeting stablecoins – cryptocurrencies designed to maintain a stable value relative to a traditional asset like the US dollar – and the practice of tokenizing real-world assets. Tokenization involves representing ownership of physical assets, such as commodities, real estate, or even company shares, as digital tokens on a blockchain.

The regulators’ concern, as articulated in the notice, stems from the increasing speculative activity surrounding both virtual currencies and RWA tokenization. They believe these activities are disrupting economic and financial order and endangering the property safety of the people, according to a translation of the notice. The government aims to maintain national security and social stability by reinforcing its control over financial instruments.

What Does This Mean for Stablecoins?

The ban specifically targets the issuance of yuan-linked stablecoins outside of China’s approval. This is a critical point, as it aims to prevent the creation of digital representations of the Chinese yuan that operate outside the control of the PBOC. The regulators are effectively attempting to thwart any private market activity that could impact the stability and control of their money supply, according to Logan Lemberger, Head of Global Financial Partnerships at MassPay.

Stablecoins, despite their name, aren’t without risk. While designed to be less volatile than cryptocurrencies like Bitcoin or Ether, they rely on the backing of the assets they are pegged to. Concerns about the reserves backing some stablecoins have surfaced in the past, and China’s regulators appear determined to avoid similar issues within their jurisdiction.

Real-World Asset Tokenization Under Scrutiny

The crackdown on RWA tokenization is perhaps the most novel aspect of this expanded ban. RWA tokenization has been gaining traction globally as a way to bring traditional assets onto the blockchain, potentially increasing liquidity, and accessibility. However, China views this practice with suspicion, subjecting it to strict controls, with limited exceptions. The notice doesn’t explicitly detail what those exceptions might be, leaving considerable ambiguity for businesses operating in this space.

The implications are significant. Tokenizing assets allows for fractional ownership, potentially opening up investment opportunities to a wider range of individuals. It also promises increased efficiency and transparency in asset trading. By restricting this activity, China is effectively limiting innovation in this area and reinforcing its preference for centralized control over asset ownership.

Impact on Overseas Activities

The ban isn’t limited to activities within China’s borders. The notice also states that overseas crypto and tokenization activities by Chinese entities will face increased scrutiny. This suggests that the PBOC intends to monitor and potentially restrict the involvement of Chinese citizens and companies in offshore crypto markets and tokenization projects.

The prohibition extends to foreign entities and individuals offering such services within China, effectively closing off a potential avenue for circumventing the ban. This demonstrates the breadth of China’s regulatory ambition and its determination to enforce its policies.

Reiterating the Core Principles

The notice reiterates that cryptocurrencies like Bitcoin (BTC$65,998.81 as of February 6, 2026) and Ether (ETH$1,926.58 as of February 6, 2026) – as well as stablecoins like Tether’s USDT (USDT$0.9995 as of February 6, 2026) – have no legal tender status in China. Trading, issuing, or facilitating transactions involving these digital currencies is deemed illegal, and related business activities are strictly prohibited across the board.

This latest move underscores China’s consistent approach to cryptocurrency: a firm rejection of decentralized finance and a commitment to maintaining control over its financial system. While other nations grapple with how to regulate the rapidly evolving crypto space, China has opted for a clear and uncompromising ban, now extended to encompass the emerging world of stablecoins and tokenized real-world assets.