- Buy Crypto
- Markets
Futures- Spot
- Copy Trade
Earn- More
Full Text of U.S. SEC Stablecoin Regulation: What Kind of Stablecoin is Not a Security?
Original Title: Statement on Stablecoins
Original Author: U.S. Securities and Exchange Commission Corporate Finance Division
Original Translator: Aki Chen, Blockchains Are Us
To further clarify the applicability of U.S. federal securities laws in the cryptocurrency field [1], the Corporate Finance Division has issued relevant guidance regarding a specific type of cryptocurrency (commonly referred to as "stablecoins") [2]. This statement is only applicable to stablecoins that meet the following criteria:
Designed with a mechanism to ensure a 1:1 peg to the U.S. Dollar (USD), supporting redemption of U.S. Dollars on a 1:1 basis (i.e., 1 stablecoin is redeemable for 1 U.S. Dollar), backed by low-risk and highly liquid reserve assets, with the U.S. Dollar value always covering the redemption demand of circulating stablecoins.
As elaborated later in this document, we refer to such stablecoins covered by this statement as "Compliant Stablecoins."
Stablecoin Overview
A stablecoin is a type of cryptocurrency designed to maintain its value relative to a reference asset (such as the U.S. Dollar or another fiat currency, gold or other commodities, or a basket of assets). Generally, stablecoins are intended to track the value of the reference asset at a 1:1 ratio. Stablecoins may employ different mechanisms to maintain their value stability: in some cases, stablecoins are backed by reserve assets, using assets held in reserves to ensure a 1:1 exchange with the reference asset; in other cases, stablecoins maintain stability through mechanisms outside of reserves, such as relying on algorithms to adjust the stablecoin's supply based on market demand [3].
Given the different stabilizing mechanisms and reserve assets (where applicable), stablecoins face significant differences in risk. Stablecoin issuers typically offer and sell stablecoins at a price equivalent to the reference asset (1:1 ratio). For example, when the reference asset is the U.S. Dollar, the issuer would sell 1 stablecoin at a price of 1 U.S. Dollar; if trading in fractional amounts, the value would still correspond at a 1:1 ratio (e.g., 0.5 stablecoins corresponding to 0.50 U.S. Dollars). Upon redemption by users, issuers usually utilize reserve assets to exchange stablecoins back to the reference asset at a 1:1 ratio.
1) Corporate Finance Division's Position on Compliant Stablecoins [4]
Based on the operational model and applicable conditions outlined in this statement, the Corporate Finance Division believes that the issuance and sale of Compliant Stablecoins do not constitute acts of issuing or selling securities as defined by Section 2(a)(1) of the Securities Act of 1933 or Section 3(a)(10) of the Securities Exchange Act of 1934 [5].
Therefore, relevant parties participating in the issuance (i.e., creation) and redemption of compliant stablecoins do not need to comply with the registration requirements of the Securities Act with the U.S. Securities and Exchange Commission (SEC), nor do they need to rely on any registration exemptions under the Securities Act.
2) Core Features of Compliant Stablecoins
Compliant Stablecoins are a type of cryptocurrency asset designed to serve as a means of payment settlement, fund transfer, or store of value. These stablecoins are designed to maintain a 1:1 fixed anchoring relationship with the U.S. Dollar (USD) by holding sufficient USD reserves and other assets deemed low-risk and highly liquid to ensure the issuer can meet redemption obligations on demand.[6]
These backing assets denominated in USD are held in reserve accounts, with their total value equal to or exceeding the redemption value of circulating compliant stablecoins. The issuer of compliant stablecoins can mint and redeem them at a 1:1 ratio with the USD, without any quantity restrictions. In other words, the issuer is always prepared to mint one stablecoin for $1 (or an equivalent proportion) and redeem one stablecoin for $1 (or an equivalent proportion), with no limits on the minting and redemption amounts.
Through this fixed-price, unlimited minting and redemption mechanism, the market price of compliant stablecoins can maintain a stable anchoring relationship with the USD.
Compliant Stablecoins are minted by the issuer and issued and sold by the issuer or designated intermediaries. In some cases, any holder can directly mint and redeem stablecoins with the issuer at a 1:1 ratio to the USD. In other cases, only designated intermediaries are eligible to directly mint and redeem stablecoins with the issuer at the same 1:1 ratio.
In the latter scenario, non-designated intermediary holders cannot directly mint or redeem stablecoins with the issuer; their sole means of acquiring or disposing of stablecoins is through secondary market transactions, which may include transactions with designated intermediaries.
The trading price of compliant stablecoins on the secondary market may deviate from their redemption price. However, the "fixed-price, unlimited minting and redemption" mechanism provides arbitrage opportunities for designated intermediaries or other eligible holders who can directly mint and redeem with the issuer, helping to keep the market price close to the redemption price.
For example, when the market price is higher than the redemption price, these parties can mint stablecoins directly from the issuer at a 1:1 ratio and sell them on the market. With an increase in supply, the market price usually decreases, approaching the redemption price. Conversely, when the market price is lower than the redemption price, these parties buy stablecoins on the secondary market and redeem them directly with the issuer. As the circulating supply decreases, the price typically rises, once again approaching the redemption price.
This Statement Covers Compliance Stablecoin Market Activities [7]
Compliance Stablecoins are positioned in the market solely for commercial purposes, specifically as a means of payment, a tool for fund transfers, or a store of value, and not as an investment product. Market participants typically emphasize that Compliance Stablecoins are designed to provide stable, fast, reliable, and easy-to-use payment, currency transfer, and value storage mechanisms. In addition, such stablecoins are often likened to a "digital dollar."
Market participants may also explain that Compliance Stablecoins have the following characteristics:
Designed to be pegged to or equal in value to the US dollar (USD) (e.g., one Compliance Stablecoin corresponds to one US dollar).
Do not entitle holders to any interest, profit, or other income rights.
Do not represent an investment in or any ownership interest in the issuer or any third party.
Do not grant holders any governance rights over the issuer or the stablecoin itself.
Holders' economic interests or losses are not affected by the financial performance of the issuer or any third party.
As described below, we believe that stablecoins introduced in the following manner demonstrate that Compliance Stablecoins are not issued or sold as securities.
1) Reserve Account
The issuer of Compliance Stablecoins will use the proceeds from their sale to purchase specific assets, which are held in a centralized asset pool called a "Reserve." The assets held in the reserve include US dollars (USD) or other assets considered low risk and highly liquid to ensure the issuer can meet all redemption requests on demand. [8]
The reserve assets at all times support the circulating amount of Compliance Stablecoins at a ratio of not less than 1:1. Reserve assets are only used to fulfill redemption requests, and while the issuer may earn income from them (e.g., interest), the following applies:
Reserve assets can be sold during the redemption process but are always managed separately from the issuer's or any third party's other assets and may not be commingled.
Reserve assets may not be used for the issuer's operations or general business purposes.
Reserve assets may not be lent, pledged, or rehypothecated.
The custody of reserve assets should ensure they do not become subject to third-party claims.
Under the aforementioned arrangement, the issuer may not use reserve assets for trading, speculation, or discretion-driven investment operations. While the issuer can decide how to use the income generated from the reserve assets (e.g., interest), such income is not distributed to Compliance Stablecoin holders.
In some cases, an issuer may publish a "Proof of Reserves" as an auditing or verification mechanism to demonstrate that its issued stablecoin is backed by sufficient reserve assets.
2) Legal Qualitative Analysis
Both Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act define "security" by listing various financial instruments, including "stock," "note," and "evidence of indebtedness." As compliant stablecoins exhibit characteristics of notes or other debt instruments in certain aspects, we analyze them based on the standard established by the U.S. Supreme Court in Reves v. Ernst & Young. [9] As described below, we will also refer to the "Howey Test" established in the U.S. Securities and Exchange Commission v. W.J. Howey Co. case for supplementary analysis. [10]
Reves Case Analysis
In the Reves case, the U.S. Supreme Court found that since "notes" are one of the instruments listed in the definitions of "security" in the Securities Act and the Exchange Act, all notes should generally be presumed to constitute securities. [11] However, this presumption can be rebutted by demonstrating a high degree of similarity between the note in question and several types of notes issued in typical commercial transactions, thus appropriately excluding it from the definition of "security." [12] This so-called "family resemblance test" includes the following four factors:
Analysis of the true intent of the transaction parties: Examining the motives that prompt a rational seller and buyer to engage in the transaction.
Circulation of the security: Examining whether the financial instrument is used in transactions "involving common trading for speculation or investment."
Reasonable expectations of the investing public: Examining whether ordinary investors would reasonably expect the note to be a security regulated by federal securities laws.
Risk reduction features: Examining whether the note has certain characteristics (e.g., subject to other regulatory mechanisms) that significantly reduce its risk, thereby decreasing the necessity of applying the Securities Act and the Exchange Act. [13]
Federal courts take a balanced, comprehensive approach when applying the Reves test, and no single factor should be considered in isolation to determine whether a note constitutes a security. [14]
1) Analysis of the True Intent of the Transaction Parties
If the seller's purpose is to raise funds for its overall operations or significant investments, while the buyer is primarily focused on the expected profits from the note, the note is likely to be considered a security. [15] Conversely, if the purpose of exchanging the note is to serve an actual business scenario or consumer use, the note is unlikely to be classified as a security.
As mentioned earlier, the buyer of a compliant stablecoin purchases it due to its stability and the need for it as a means of payment or store of value in commercial transactions. Since a compliant stablecoin neither pays nor promises interest, nor grants the holder any payment or asset rights other than the 1:1 USD redemption, the buyer does not purchase and hold the stablecoin for profit expectations. The issuer of a compliant stablecoin uses the sale proceeds to replenish the reserve account. Although the issuer may utilize the income generated from the reserve to support its business operations, the issuance and purchase are primarily for commercial purposes rather than investment purposes.
2) Circulation of Securities
In the Reves case, the U.S. Supreme Court pointed out that this factor examines whether there are "widespread sales to the general public for investment or speculative purposes." When a financial instrument is "sold and distributed to the general public," this factor is satisfied, which compliant stablecoins adhere to.
However, the price stability design of a compliant stablecoin helps ensure that its secondary market trading is not for speculative or investment purposes. Although arbitrage opportunities may arise in the secondary market when there is a deviation between the market price and the redemption price, such arbitrage opportunities are effectively limited as the issuer can redeem on demand and mint and redeem on a 1:1 basis with the U.S. dollar at any time.
3) Reasonable Expectations of the Investing Public
This factor aims to examine the marketing and sales approach of the relevant financial instrument. In the Reves case, the court explicitly stated: "The advertising characterized the note as an 'investment'...and there were no countervailing factors sufficient to create a genuine issue of fact as to that characterization."
As mentioned earlier, compliant stablecoins are not promoted as investment instruments. Instead, they are marketed as a stable, fast, reliable, and easily accessible means of transferring value or storing value, without emphasizing potential profits or investment returns. Therefore, from the perspective of the investing public, it would not be reasonable to expect such stablecoins to be regulated as investment instruments under securities laws.
4) Risk-Reducing Features
In the Reves precedent, this factor focuses on risk-mitigating features such as whether the note has collateral backing, insurance coverage, or is subject to other regulatory mechanisms, thereby "significantly diminish[ing] the risk of the financial instrument to the point where the application of securities laws is no longer necessary." The issuer of an asset-backed stablecoin maintains a reserve mechanism designed to fully fulfill redemption obligations. This reserve consists of USD and/or other assets considered low risk and highly liquid to ensure the issuer can meet all redemption requests at any time.
Therefore, considering all relevant factors, this department believes that based on the Reves Test, Asset-Backed Stablecoins do not constitute securities, for the following reasons:
· The issuer uses the proceeds from the sale to establish a reserve account, and the buyer's motivation is not primarily based on the expectation of profit;
· The distribution of Asset-Backed Stablecoins does not encourage speculation or investment trading behavior;
· A reasonable buyer would not expect this type of stablecoin to be an investment vehicle;
· The ongoing provision of a sufficient reserve that can be readily used to fulfill redemption obligations constitutes a substantive risk mitigation mechanism.
In summary, the issuance and sale of Asset-Backed Stablecoins are intended for commercial or consumer use rather than for investment purposes.
Howey Test Analysis
If Asset-Backed Stablecoins are not considered notes or other debt instruments and are not explicitly listed as other financial instruments under Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act, then a further analysis of the issuance and sale activities must be conducted under the "investment contract" standard, known as the Howey Test. This test, centered on the "economic realities," is used to assess whether arrangements or instruments not within the scope of the above statutes constitute securities.[22]
When analyzing the economic substance of a transaction, the Howey Test focuses on whether there is an investment of money in a common enterprise and whether the investor expects profits predominantly from the efforts of others (usually the project's efforts).[23] Since the Howey case, the Supreme Court has distinguished between an investor's motive (attracted by the "profit-making prospect" [24]) and a consumer's motive (for the "use or consumption of the purchased item").[25] Federal securities laws apply only to transactions involving investment activities and do not apply to consumer transactions.[26]
As mentioned earlier, buyers of Asset-Backed Stablecoins do not purchase such stablecoins based on the profit expectation from the entrepreneurial or managerial efforts of others. This instrument is not marketed in the market as an investment product nor emphasizes any profit potential.[27] Conversely, the buyers acquire Asset-Backed Stablecoins with the motivation to use them as a "digital dollar" for payments or store of value, similar to scenarios involving the use of dollars.
Therefore, this department believes that the issuance and sale of Asset-Backed Stablecoins do not constitute an investment contract and are not securities under the securities laws.
For further information, please submit an online request form through the following website to contact the Chief Legal Advisor's Office of this department: https://www.sec.gov/forms/corp_fin_interpretive
[1] In this statement, "crypto asset" refers to an asset generated, issued, and/or transferred through a blockchain or similar distributed ledger technology network, including but not limited to assets referred to as "tokens," "digital assets," "virtual currencies," and "coins," relying on cryptographic protocols to achieve its functionality. Additionally, the "issuer" referred to in this statement includes both the issuer itself and its affiliates.
[2] This statement represents the views of the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (the "Division"). This statement is not a rule, regulation, guidance, or official statement of the U.S. Securities and Exchange Commission, and the Commission has neither approved nor disapproved its content. Like all staff statements, this statement has no legal force: it does not change or amend existing law, nor does it impose new legal obligations on any entity.
[3] Unlike reserve asset-backed stablecoins, algorithmic stablecoins typically rely on specific algorithmic mechanisms to maintain price stability rather than being backed by real-world assets.
[4] The Division only expresses views on Compliance Stablecoins as described in this statement. For other types of stablecoins, this statement does not provide an assessment, including but not limited to the following categories:
Stablecoins designed to peg the value to a non-U.S. dollar reference asset (such as non-U.S. fiat currency, commodities, other crypto assets, etc.). Stablecoins using alternative stability mechanisms (such as algorithmic mechanisms) to achieve value pegging. Stablecoins pegged to the U.S. dollar value but not redeemable for U.S. dollars. And income-generating stablecoins (referred to as "yield-bearing stablecoins"), including stablecoins that provide holders with income, interest, or other passive revenue, whether in the form of regular payments, reward mechanisms, or through a "re-basing" mechanism that automatically adjusts the stablecoin's total supply.
[5] The Division's views are not conclusive and cannot definitively determine whether a stablecoin (including an asset-backed stablecoin) constitutes a security. The determination of whether a stablecoin is a security depends on a factual analysis of the specific characteristics of the stablecoin and the specific circumstances of its issuance and sale. If the actual situation of a stablecoin differs from that described in this statement, the Division's determination of whether it constitutes a security may also be different.
[6] Examples of such low-risk and highly liquid assets include: U.S. dollar cash equivalents, demand deposits in banks or other financial institutions, U.S. Treasury securities, and money market funds registered under the Investment Company Act of 1940. Excludes precious metals or other crypto assets.
[7] As explained in the "Legal Analysis" section below, in evaluating whether an issuer or promoter is engaged in an offering or sale of securities, federal courts will examine the marketing practices employed.
[8] Some asset-backed stablecoin issuers may be subject to state-law regulation, with state regulations potentially specifying the types of assets permissible in reserves.
[9] Reves v. Ernst & Young, 494 U.S. 56 (1990). Federal courts apply the standard established in the Reves case, not only analyzing a "note" but also applying it to other financial instruments with debt features. See, for example, In re Tucker Freight Lines, Inc., 789 F. Supp. 884, 885 (W.D. Mich. 1991) (court finds the "Reves method applicable to all debt instruments, including debt certificates"). Because asset-backed stablecoin issuers undertake the obligation to fulfill redemptions, stablecoins can be viewed as a debt of the issuer. While asset-backed stablecoins do not exhibit all typical note characteristics (such as no explicit maturity, no agreed interest payments, etc.), the Division wishes to expressly state that even if asset-backed stablecoins were considered notes or debt certificates, their issuance and sale would not constitute an offering and sale of securities, as per the Division's view.
[10] SEC v. W.J. Howey Co., 328 U.S. 293 (1946). In situations where necessary, federal courts typically apply both the Reves and Howey tests. For example, in Banco Espanol de Credito v. Security Pacific Nat'l Bank, 763 F. Supp. 36 (2nd Cir. 1991), the court applied both the Reves and Howey tests concurrently to evaluate loan participations involved in the case.
[11] Reves, 494 U.S. pp. 64–66.
[12] Ibid, p. 65. Notes excluded from the "securities" definition include:
(1) Notes related to consumer financing;
(2) Notes secured by residential mortgages;
(3) Short-term notes secured by small business or their assets;
(4) Notes for bank customers' character loans;
(5) Short-term notes secured by accounts receivable;
(6) Notes used for the orderly recording of commercial transactions' book-debts;
(7) Loan notes provided by commercial banks for enterprise day-to-day operations.
[13] Ibid, pp. 66–67.
[14] See, for example: SEC v. J.T. Wallenbrock & Associates, 313 F.3d 532, 537 (9th Cir. 2002): "Failure to satisfy any one factor is not determinative; the four factors should be considered collectively."
[15] Reves p. 60; Pollack v. Laidlaw Holdings, Inc., 27 F.3d 808, 812 (2nd Cir. 1994).
[16] In relevant circumstances, we believe greater weight should be given to the buyer's motivation. See, for example, Pollack, p. 813 (court finds that in situations where buyers seek to invest funds in a safe, conservative investment, even if the seller's motivation differs, the note should still be considered a security).
[17] For example, asset-backed stablecoin issuers commonly offer their products in the form of stored-value or pre-paid products and comply with relevant state-level money transmission laws.
[18] Reves p. 68.
[19] Ibid, pp. 68–69.
[20] Ibid, p. 61. In the Reves case, the court found no risk-mitigating factors due to the notes' "unsecured, uninsured" nature, and stated that "if the securities laws and the UCC do not apply, these notes may exist entirely outside the federal regulatory scheme" (p. 69). Also see Pollack, 27 F.3d p. 814 (highlighting that in analyzing the fourth factor of Reves, "the amended complaint expressly states the involved mortgage loan participation interests as 'unsecured' and 'not collateralized'").
You may also like
Token Cannot Compound, Where Is the Real Investment Opportunity?
February 6th Market Key Intelligence, How Much Did You Miss?
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.
Former Partner's Perspective on Multicoin: Kyle's Exit, But the Game He Left Behind Just Getting Started
Why Bitcoin Is Falling Now: The Real Reasons Behind BTC's Crash & WEEX's Smart Profit Playbook
Bitcoin's ongoing crash explained: Discover the 5 hidden triggers behind BTC's plunge & how WEEX's Auto Earn and Trade to Earn strategies help traders profit from crypto market volatility.
Wall Street's Hottest Trades See Exodus
Vitalik Discusses Ethereum Scaling Path, Circle Announces Partnership with Polymarket, What's the Overseas Crypto Community Talking About Today?
Believing in the Capital Markets - The Essence and Core Value of Cryptocurrency
Polymarket's 'Weatherman': Predict Temperature, Win Million-Dollar Payout
$15K+ Profits: The 4 AI Trading Secrets WEEX Hackathon Prelim Winners Used to Dominate Volatile Crypto Markets
How WEEX Hackathon's top AI trading strategies made $15K+ in crypto markets: 4 proven rules for ETH/BTC trading, market structure analysis, and risk management in volatile conditions.
A nearly 20% one-day plunge, how long has it been since you last saw a $60,000 Bitcoin?
Raoul Pal: I've seen every single panic, and they are never the end.
Key Market Information Discrepancy on February 6th - A Must-Read! | Alpha Morning Report
2026 Crypto Industry's First Snowfall
The Harsh Reality Behind the $26 Billion Crypto Liquidation: Liquidity Is Killing the Market
Why Is Gold, US Stocks, Bitcoin All Falling?
Key Market Intelligence for February 5th, how much did you miss out on?
Wintermute: By 2026, crypto had gradually become the settlement layer of the Internet economy
Token Cannot Compound, Where Is the Real Investment Opportunity?
February 6th Market Key Intelligence, How Much Did You Miss?
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.
Former Partner's Perspective on Multicoin: Kyle's Exit, But the Game He Left Behind Just Getting Started
Why Bitcoin Is Falling Now: The Real Reasons Behind BTC's Crash & WEEX's Smart Profit Playbook
Bitcoin's ongoing crash explained: Discover the 5 hidden triggers behind BTC's plunge & how WEEX's Auto Earn and Trade to Earn strategies help traders profit from crypto market volatility.
App