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DCG Founder's Interview: From Bitcoin Pioneer to AI Revolution, Barry's Crypto Empire and Bittensor Vision
Original Article Title: Barry Silbert is Back: The Next Big Crypto Bet
Original Article Author: Raoul Pal
Original Article Translation: Yuliya, PANews
In today's fast-paced world of cryptocurrency and blockchain technology, Barry Silbert, the founder and CEO of DCG (Digital Currency Group), is undoubtedly a pioneer in the industry. In his latest podcast interview with Raoul Pal, Barry shared his journey from early Bitcoin investor to building DCG and its subsidiaries such as Grayscale and Foundry, experiencing the market's bull and bear cycles, including the 2022 cryptocurrency crash.
Today, Barry is setting his sights on the next major bet - Bittensor. He elaborated on his role as the founder and CEO of Yuma, and how Bittensor could potentially become a more transformative decentralized intelligence network layer than Bitcoin. This article will delve into Barry's experiences, DCG's development, the 2022 crisis, and his outlook on the future of Bittensor and AI. PANews provided the textual translation for this podcast.
Bitcoin Enlightenment Journey
Q: Barry, please share how you transitioned from Wall Street to Bitcoin?
Barry: I was initially an investment banker, but I realized the need to create something new, so I founded the first secondary market for private stocks and illiquid assets, Second Market. This platform played a crucial role during the 2008 credit crisis when many companies like Facebook and Twitter couldn't raise funds through the IPO market, and Second Market became a vital channel for trading their stocks.
In 2011, I first encountered Bitcoin through a Wired article/Jason Calacanis's podcast. At that time, I still believed the impact of the credit crisis had not subsided, so I remained cautious. I spent six months researching Bitcoin, reading vast amounts of material, and engaging with industry insiders. By early 2012, I realized that Bitcoin could have a profound impact on the world and decided to get involved to avoid future regrets.
Q: At what price did you initially purchase Bitcoin?
Barry: I purchased hundreds of thousands of dollars worth of Bitcoin at a price of 7-8 dollars through the Mt. Gox platform. The price surged to 30 dollars at one point and then dropped to 5 dollars. Over the next 6-12 months, it started to rise again to 50, 60, 70 dollars. I then began looking for companies to invest in that were building Bitcoin infrastructure, such as early investments in Coinbase, Chainalysis, Ripple, and other first-generation infrastructure companies.
Interestingly, I actually made these investments using Bitcoin. If I had just held onto those Bitcoins instead of investing in these companies, I would have actually had a better return. Those of us early Bitcoin holders have similar stories—In 2013, when my wife and I had our first daughter, we were both trying to get people to use Bitcoin. I remember using Bitcoin worth 2000-5000 dollars to buy gift cards, mainly to buy diapers. I've never looked back to calculate how much that money is worth now, but it's safe to say that the value of that Bitcoin from 2013 is astounding today.
The Rise of an Empire: The Birth of Grayscale and DCG
Q: How did Grayscale and DCG come into existence?
Barry: At that time, I was running Second Market, and I told the board (including Chamath Palihapitiya) that I thought we should do something significant in the Bitcoin space. We had tens of thousands of sophisticated investors looking for interesting alternative investments. I understood the history of gold and gold investment, and knew that the Gold ETF was the catalyst that made gold a accessible, and legitimate asset class.
I decided to build a Bitcoin version similar to the SPDR Gold ETF. We reached out to the SEC, but they knew nothing about Bitcoin. We quickly realized that the SEC would not allow a Bitcoin ETF in 2013, so we did something groundbreaking—we launched it as a private placement and then made it publicly tradable on the OTC QX market, which became the Grayscale Bitcoin Trust.
Since we purchased a large amount of Bitcoin, we also established a Bitcoin trading desk, started buying Bitcoin ourselves, and investing from our balance sheet. Eventually, in 2014, Nasdaq called saying they wanted to acquire Second Market, so I sold Second Market to Nasdaq and went all-in on Bitcoin. The Bitcoin product became Grayscale, the trading operation became Genesis, and the investment portfolio became DCG.
Question: How much assets does Grayscale currently manage?
Barry: I believe it's around $300 billion by the end of the year. Grayscale, as a pioneer, has been highly innovative in its product design, making this asset class more easily accepted by the mainstream market, although many investors still find it challenging to participate conveniently.
Grayscale now has over 30 different products, including Bitcoin Trust, Bitcoin Mini, Large Cap Trust (GDLC), followed by Single Token Trust. Grayscale's model is to open up these tokens, making this asset class more accessible to a broader range of investors, transforming it from private trusts to publicly traded trusts.
I like to think of Grayscale as the next Vanguard Group. Just as Vanguard Group pioneered index investing, PIMCO pioneered bond investing, Grayscale is pioneering crypto investing.
Question: What is DCG's investment strategy?
Barry: We talk about what we call the 'DCG playbook.' We identify protocols and tokens that we believe have the opportunity to change the world, and then we bring our capabilities to those ecosystems: we invest, build, purchase, educate, and create access. This doesn't happen often; I do it about once every five years, but when we do it, we are very successful.
The uniqueness of DCG's model is that we are a private company rather than a fund. As a private company and not a fund, I have the luxury of permanent capital and time. We can make investment decisions and capital allocation decisions; I have this interesting job of trying to anticipate the world five or ten years from now and take a bet. I am wrong more often than I am right, but when you are right, the returns are enormous.
Question: How did DCG grow into such a large enterprise?
Barry: We are in a unique position to be a bridge between this asset class and the traditional investment markets. Over the next five years, we launched Foundry, now the largest Bitcoin mining pool globally. Prior to Foundry, the U.S. had virtually no Bitcoin mining activity, while China controlled about 80% of the hash rate.
We decided to bring Bitcoin mining to the U.S. by providing funding to U.S. miners, purchasing a significant amount of equipment from manufacturers, and then providing financing to these miners to help them get started. As part of it, we set up this mining pool, and now one-third of Bitcoin transactions go through the Foundry USA pool we created.
We also acquired CoinDesk during the depths of the cryptocurrency bear market for $300,000, developed it into a business, and sold it to my friend Brendan a year ago at a good price. Additionally, we acquired Luno (a Coinbase-like platform targeting emerging markets, mainly dominant in Nigeria and South Africa). So far, we have invested in about 300 companies and 50 different crypto assets.
Q: How does your mining business work?
Barry: We have two businesses. One is Foundry, which operates a mining pool and has established the infrastructure that allows these U.S. miners to mine Bitcoin and secure the network. It also has on-the-ground operations with a team essentially setting up and operating facilities for many miners across the country. Foundry doesn't take on capital risk or engage in miner procurement or Bitcoin price speculation. Its core mission is to drive the infrastructure development of the U.S. Bitcoin mining industry. For us, this is obviously a complex challenging business because it's Bitcoin, your revenue is fluctuating, but we don't have to make large capital investment decisions or evaluate hash rates or payback periods.
The other business is Fortitude, where we actually mine ourselves. We developed or created the first "risk miner," where we mine many different tokens, all proof-of-work (POW) tokens, viewing mining more as venture capital. It's a nice business, not many miners do this.
Crisis and Rebirth
Q: How did the 2022 cryptocurrency crash happen?
Barry: During COVID, the global economy suffered a massive shock, with countries resorting to "money printing" policies, leading to the 2021 price surge and creating an asset bubble. Excessive leverage was widespread across various assets, with many complex relationships between known and unknown creditors and borrowers.
First, the Terra Luna decoupling event triggered a series of chain reactions. Subsequently, Three Arrows Capital (3AC) failed to meet Genesis' additional margin requirement in June, becoming the catalyst. 3AC borrowed from multiple channels, but its status as the largest borrower was not widely known. When 3AC collapsed, numerous counterparties were affected. As the largest lender and major broker in the field, Genesis had to mark-to-market its balance sheet after 3AC's collapse, leading to an equity gap. Digital Currency Group (DCG) intervened and provided support.
However, the FTX event further heightened the market's distrust, leaving all parties with no trust in their counterparties. This trust crisis led to a "bank run" on Genesis and similar institutions, ultimately forcing Genesis to shut down its operations and enter bankruptcy.
Q: What was your personal experience navigating through this crisis?
Barry: This was challenging in many ways. On one hand, everything in cryptocurrency and social media was amplified, both the good and the bad, including lies. It was shocking to see people willing to fabricate and believe these falsehoods, and I received many death threats during this time.
Additionally, I was surprised by the way regulatory agencies exercised their power. To make things even more difficult, during this process, my daughter was diagnosed with cancer, so I was managing the business crisis while also supporting my daughter through chemotherapy and surgery. Fortunately, my daughter has been cancer-free for 9 months now, and DCG is thriving.
The New Journey: Cross-Innovation of AI and xCrypto
Q: What made you transition from focusing on Bitcoin to the broader crypto space?
Barry: Part of it was having external shareholders and employees, and as the asset class grew and more applications were built, it seemed wise to stay open to other cryptocurrencies that could have practical utility. I didn't want to be a maximalist for Bitcoin's sake alone.
Another reason was encountering some very interesting teams in this process that I was excited about. I like betting on underdogs, big ideas, and visionary people. I think most people now realize that there might not be much besides Bitcoin that is valuable, which is also my sentiment now.
Q: What sparked your interest in the intersection of AI and blockchain?
Barry: Over the past 12-13 years, since my first Bitcoin purchase, I have always maintained a knowledge-based curiosity about everything happening in our space. I believe 99.9% of crypto tokens have no reason to exist, no value, so the threshold for me to be excited about something is really high.
Over the past few years, as AI became a topic, I started appreciating the power of AI. People on my team were introduced to a few individuals who wrote a whitepaper about Bittensor in 2021, and they were excited about it. I began exploring the intersection of crypto and AI, and I think many early applications will be using crypto as a payment solution for AI rather than building infrastructure on it to enhance AI.
After deep diving into Bittensor, I believe this is the next big wave in the crypto space, akin to key themes such as Bitcoin, Ethereum, NFTs, L2, and DeFi. Last year, we decided to invest in Bittensor and build a project on top of it to help educate the market, raise awareness, and create access opportunities. I launched a new business called Yuma last fall and took on the role of CEO, focusing on Bittensor's development and promotion while continuing to run DCG.
Why Bittensor Has Captured the Attention of Bitcoin OGs and AI Enthusiasts
Q: What is Bittensor?
Barry: If you ask five people what Bittensor is, you might get 15 different answers. This phenomenon is very similar to the early days of Bitcoin in 2012. At that time, Bitcoin was described as digital gold, blockchain, a payment system, and a global currency.
Bittensor is a decentralized intelligence network, with the core idea of creating a global permissionless platform incentivizing global intelligence to solve any problem or challenge. This incentive mechanism is achieved through a cryptographic token. For non-crypto folks, Bittensor can be simply understood as the intelligent World Wide Web in the information internet. Anyone can launch so-called "subnets" on this platform, which aim to harness global intelligence to solve specific problems such as computation, reasoning, data processing, or training. Subnets have already been launched to predict Bitcoin prices or sports scores.
Reflecting on the history of the internet's development, the launch of the Mosaic browser 30 years ago triggered the Cambrian explosion of websites, when people accessed the internet through Prodigy and America Online, similar to today's OpenAI and Claude. Today, Bittensor is leading a new era of open and permissionless innovation, with rapid momentum.
Q: What excites you about Bittensor?
Barry: The Bittensor project has garnered broad attention for its unique fair launch mechanism and mission-driven community. Similar to Bitcoin, Bittensor started from a whitepaper, evolved into code, and ultimately launched, without going through venture capital rounds or reserving tokens for a foundation or team members. This means that Bittensor's participants are all in due to a genuine interest in the technology, joining by buying or earning TAO tokens. The Bittensor community has thus organically formed, with members coming together due to a shared mission and ambitious goals. The project adopts a tokenomics model similar to Bitcoin, with a 21 million token cap and introduces a halving mechanism like Bitcoin, making its economic model easy to grasp. This design not only emphasizes the cryptographic technology itself but also focuses on how to address global issues through incentive mechanisms, attracting those who seek to change the world through innovative means.
Q: How does a subnet work?
Barry: Bittensor has undergone a significant upgrade in the past few months, and currently, each subnet has its own token. This structure is somewhat similar to a blockchain L2 solution, but with one key difference: each subnet token is transacted in TAO. TAO, acting as a utility currency, serves as the pricing base for all subnet tokens. When users attempt to predict which subnet can produce the most valuable intelligence, they are effectively indirectly purchasing TAO in the process of buying subnet tokens, as all transactions are facilitated by a liquidity pool. Currently, Bittensor has launched 88 subnets, with new ones emerging every two days. These subnets are independently operated by different teams, each focusing on intelligent problem-solving for their respective target scenarios. At the same time, they are collaborating to drive the widespread adoption of the entire Bittensor network and the TAO token. By attracting more funds into their subnet tokens, these funds will eventually flow into TAO, promoting the development of the entire ecosystem.
Two subnets may perform the exact same task, but one may excel, bringing billions of dollars in revenue to the entire ecosystem. As the value of this subnet's token skyrockets, the token of the other subnet will rise as well. This collaborative model stands out in the crypto space as it embodies a spirit of mutual support within the community, rather than a mere competitive relationship. Any token launched on Ethereum or Solana usually lacks value flow to their underlying platform, with teams focusing more on the growth of their own token's value rather than the success of Ethereum or Solana themselves. This phenomenon is somewhat similar to the NFT market priced in ETH, but Bittensor's subnet collaboration demonstrates a closer connection and the potential for mutual growth.
Q: What types of people are in the Bittensor ecosystem?
Barry: A Bitcoin OG believes that the current market is in a stage similar to 2012-2013, with Bittensor's price around $200 and a market cap of around $1.5 billion.
Unlike the early libertarian leanings of Bitcoin, the Bittensor community has brought together a group of technically savvy AI enthusiasts. These members have been focused on building infrastructure over the past few months to make the intelligence generated by subnets accessible or monetizable. Related applications are also growing rapidly, helping people discover, invest in, and track subnets.
Amid the current market correction, community members are focusing on the rapid development of their own projects, avoiding distractions from cryptocurrency and macroeconomic factors. Everyone is striving to build infrastructure, properly position their businesses and investments, in order to seize opportunities before the market further matures.
Against the backdrop of the current market correction, many are focusing on the development of their respective projects without being distracted by cryptocurrency and macroeconomic factors. Grayscale recently introduced the Bittensor Trust, aimed at replicating its 2013 success with Bitcoin. This move signifies Grayscale's hope that through this trust product, more investors can conveniently participate in the Bittensor and Yuma ecosystems. Grayscale's goal is to enable investors unfamiliar with or unconcerned about staking, exchanges, or Uniswap pools to also bet on projects they believe could be the next Amazon of the smart web.
Our investment strategy primarily focuses on infrastructure development, subnet tokens, and TAO itself. We typically do not support projects that attempt to create enterprise value for equity holders and token holders, but rather focus on building the Bittensor ecosystem. Specifically, we are looking for infrastructure projects similar to Coinbase, BitGo, and Chainalysis to drive Bittensor's development. Currently, we have launched an accelerator to help those interested in building subnets kickstart their projects, incentivizing global talent to participate in the competition. Additionally, users holding TAO can stake on the Yuma platform.
Q: How is Bittensor different from Bitcoin mining?
Barry: Bittensor differs from Bitcoin mining significantly in terms of economic incentive mechanisms. The Bitcoin network issues approximately $12 billion in rewards to miners annually to maintain network security. However, Bittensor utilizes these economic incentives to pay compute providers, model owners, and data owners, similar to the operation of network infrastructure. At the current TAO price, approximately $500 million circulates among various parties in the Bittensor network, and as the TAO price rises, this amount could increase to $1 billion, $5 billion, or even $10 billion. This incentive mechanism not only attracts large enterprises but also entices graduate students in dorm rooms, all striving to find the best way to contribute to the Bittensor network. This model creates a strong economic incentive for participants of all kinds, driving the network's growth and innovation.
Q: How does Bittensor address the near-zero cost of AI?
Barry: Looking back, accessing the Internet through America Online and Prodigy was the norm until the introduction of web browsers allowed users to access the same services for free. Today, Bittensor is redefining this model by providing cheaper, faster computation, modeling, and data access. Its open design allows global access to anyone, balancing the competitive landscape. This innovation will enable businesses like Uber, Airbnb, and TikTok to rise on the internet, similar to what was unimaginable in 1995.
Bittensor eliminates single points of failure, such as OpenAI or Meta API restrictions, while providing redundancy and scalability. More importantly, it offers unrestricted open access without censorship, akin to the World Wide Web. Teams need to think about how to leverage this generated intelligence to pay bills and achieve monetization. Bittensor's emergence is not just a technological advancement but also a reaffirmation of internet openness and innovative potential, providing limitless possibilities for future business models.
Q: How do you envision the future of Bittensor?
Barry: The boldest prediction I can make about Bittensor is that it may become a better version of Bitcoin as a global store of value. The Bitcoin network spends $10-12 billion annually to maintain its security, whereas Bittensor presents a brand-new vision: to use these funds to incentivize a global problem-solving network, encouraging people to find solutions to significant world issues. Imagine if these funds increase from $1 billion to $2 billion, $5 billion, or even $10 billion; the innovation and transformation that would follow. While securing the Bitcoin network is valuable, Bittensor, with its similar tokenomics features to Bitcoin, including halving mechanisms and decentralization, demonstrates tremendous potential.
But I believe Bittensor has that early Bitcoin adopter's sense of purpose, yet unlike Bitcoin, it is not about creating digital gold, decentralized currency, or eliminating government control of wallets. Instead, Bittensor aims to help solve major problems by leveraging global intelligence.
The future of the internet feels like scalable intelligence, and Bittensor is exploring the decentralized application of this intelligence. Currently, Bittensor is rolling out some subnets, some directly related to AI involving inference, training, or fine-tuning. These subnets incentivize competition, and any transaction that requires people to compete can leverage these subnets. While Bittensor's applications are currently primarily focused on AI, its potential use cases are not yet clear. It provides an incentive mechanism for decentralized work teams, encouraging them to perform tasks for others and fostering team collaboration, forming a coordination layer. Meanwhile, Yuma plans to launch product solutions this year to give people direct access to subnets.
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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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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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