Huobi Growth Academy | In-Depth Interpretation of China’s Latest Virtual Asset Supporting Regulatory Guidelines: Paradigm Restructuring and Strategic Implications Under the “Blocking-and-Guiding” Approach
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Huobi Growth Academy | In-Depth Interpretation of China’s Latest Virtual Asset Supporting Regulatory Guidelines: Paradigm Restructuring and Strategic Implications Under the “Blocking-and-Guiding” Approach
From the perspective of national strategy, this set of policy measures represents a proactive “mine-clearing” and “foundation-laying” effort for the financial infrastructure.
Navigating Web3 tides with focused insightsExecutive Summary
On February 6, 2026, China’s financial regulatory system simultaneously released two highly symbolic policy documents: the “Notice on Further Preventing and Addressing Risks Related to Virtual Currencies and Other Matters” (Yinfa [2026] No. 42), jointly issued by the People’s Bank of China and seven other ministries and commissions; and the China Securities Regulatory Commission’s (CSRC) “Regulatory Guidelines on Tokenized Asset-Backed Securities Issued Overseas Using Domestic Assets.” These two documents—one prohibitive, the other facilitative; one focused domestically, the other externally—form a logically coherent, goal-oriented regulatory package. This marks China’s regulatory approach toward digital finance innovations represented by blockchain technology transitioning definitively from early-stage “campaign-style cleanups” and “risk warnings” into a new phase of “institutional construction” and “strategic guidance.” This policy adjustment is far more than simple regulatory tightening; rather, it constitutes top-level design aimed at balancing risk prevention with innovation-driven development and reshaping the architecture of future financial infrastructure—grounded in deep insight into global trends and technological fundamentals. Its core philosophy can be precisely summarized as follows: implementing an “ironclad encirclement” against domestic retail speculation and hype, while opening a “narrow, compliant gateway” for cross-border innovations serving the real economy.
I. Comprehensive Upgrade and Precise Classification: Blocking All Pathways to Systemic Risk
The “Notice” first demonstrates a strategic expansion of regulatory scope and an unprecedented intensification of classification rigor. Its most salient feature is the explicit inclusion of “Real-World Asset Tokenization” (RWA) at the core of regulatory oversight—and subjecting it to scrutiny as stringent as that applied to virtual currencies. This move carries both foresight and decisive significance. As a global fintech trend involving the blockchain-based digital representation and trading of traditional assets (e.g., bonds, real estate income rights, commodities), RWA represents an evolution of securitization technology. Left unregulated, it could easily become a “technological backchannel” circumventing existing frameworks for securities issuance review, information disclosure, and investor suitability management—breeding more complex risks such as illegal fundraising, fraud, and cross-contagion of financial risks. The “Notice” explicitly states that unauthorized RWA activities conducted within China constitute illegal financial activities—including illegal token or voucher issuance, unauthorized public securities offerings, and illegal futures trading. This classification decisively shuts down any illusion of exploiting “technological innovation” as a pretext for “regulatory arbitrage,” establishing the inviolable foundational principle: “Regardless of how technological forms evolve, financial activities must operate under license and fall squarely within regulatory purview.”
Meanwhile, the “Notice” also adopts a firmer, more comprehensive classification of preexisting risks. It not only reaffirms the non-monetary nature of virtual currencies such as Bitcoin but innovatively identifies “stablecoins pegged to legal tender” as “de facto performing some functions of legal tender,” and strictly prohibits the issuance of any stablecoin pegged to the RMB without approval. This provision reflects exceptional strategic vision—aiming to preempt at the source any potential challenge to the RMB’s sovereign monetary status or attempts to construct parallel settlement systems in digital space. By categorically defining all virtual currency–related business activities—including exchange, market-making, information intermediation, and derivatives trading—as “illegal financial activities,” and repealing the 2021 notice, regulators have signaled their resolute determination to eliminate legacy risks entirely and leave no gray zones.
II. Building a Full-Chain, End-to-End “Firewall”: Multi-Dimensional Isolation from Funds to Information
If classification declares intent, then the regulatory enforcement framework laid out in the “Notice” reflects the robust systemic capability to translate that intent into reality. It deploys a full-chain, end-to-end regulatory network covering “fund flows, information flows, and technology flows,” designed to physically isolate risks.
At the fund-flow level, regulatory requirements have reached unprecedented strictness. All financial institutions and non-bank payment institutions are comprehensively prohibited from providing any services related to these activities—from account opening, fund transfers, clearing and settlement, to product issuance, collateral inclusion, and insurance coverage—effectively severing all financial channels. This amounts to cutting off the “umbilical cord” between the digital asset sector and the mainstream financial system, denying it legitimate liquidity inflows and credit support.
At the information-flow and marketing front, regulation acts simultaneously online and offline. Online, internet enterprises are strictly forbidden from providing online venues, commercial displays, marketing promotions, or paid traffic referrals—and are required to proactively report leads and provide technical assistance. Offline, market regulation authorities prohibit the use of terms such as “virtual currency” and “RWA” in enterprise registration names and business scopes at the source, while strengthening advertising oversight. This coordinated strategy aims to eliminate the “visibility” and “legitimacy cues” of digital assets in the public sphere, reducing speculative enthusiasm and participation willingness at the societal cognition level—a form of risk prevention operating deep within social psychology.
At the physical technology layer, the campaign against virtual currency “mining” continues to deepen, with provincial governments assigned overall responsibility, bans on new projects, and active cleanup of existing ones. More critically, the policy innovatively introduces an “overseas service blocking” clause. It explicitly states that “foreign entities and individuals may not, in any form, illegally provide virtual currency–related services to domestic entities,” and stipulates liability for domestic enablers. This extraterritorial provision—combined with strict controls over cross-border payment channels—effectively constructs a “digital financial border” against the global internet, imposing formidable legal deterrence on any overseas exchanges or DeFi protocols attempting to serve Chinese users.
III. Opening the Sole “Compliant Narrow Gateway”: Strategic Intent Behind the CSRC’s “Guidelines”
While the “Notice” erects a tightly sealed wall, the CSRC’s “Guidelines” deliberately design and open a single, highly restricted yet profoundly significant “gateway.” This gateway leads exclusively to one destination: permitting the issuance of asset-backed securities (ABS) tokens overseas, backed by domestic assets or cash flows.
This is absolutely not a concession to virtual currency speculation, but rather a precisely calibrated act of “guidance.” Its design embodies exceptional strategic deliberation. First, its business model is strictly confined: underlying assets must be domestic tangible assets or their income rights generating stable cash flows (e.g., infrastructure toll rights, trade receivables, leasing assets); issued tokens must be ABS tokens grounded in sound financial logic; and both the issuance market and investors must be strictly confined to overseas jurisdictions. This ensures the innovation remains tightly anchored to the real economy, serves genuine corporate cross-border financing needs, and is fully isolated from domestic retail speculation markets.
Second, its regulatory approach is exceptionally rigorous: adopting a “pre-issuance filing with the CSRC by domestic entities” model—not mere post-facto reporting. Filing entities must submit complete overseas issuance documentation and undergo end-to-end scrutiny covering the authenticity of underlying assets, compliance of transaction structures, and effectiveness of risk isolation. This regulatory intervention occurs earlier and penetrates deeper than traditional overseas bond issuances or listings, embodying the regulatory principle of “same business, same risk, same rules”—ensuring innovation remains firmly within the regulatory line of sight.
The opening of this “narrow gateway” carries at least three strategic intentions: First, supporting real-economy financing: creating a pilot channel for high-quality domestic enterprises to leverage blockchain technology to enhance cross-border asset securitization efficiency and reduce costs—an immediate demonstration of fintech empowering the real economy. Second, accumulating regulatory experience and talent: within a controlled “overseas sandbox,” regulators, financial institutions, and legal intermediaries can closely observe, understand, and master the entire asset tokenization process—accumulating invaluable regulatory experience and cultivating specialized talent for potential large-scale financial digitization transformations ahead. Third, participating in international rule-making: through proactive regulation and practice, China gains voice in the frontier global financial domain of asset tokenization, avoiding passivity in future international rule formation—a profound strategic layout in great-power financial competition.
IV. Emergence of a “Dual-Track” Ecosystem and Global Regulatory Divergence
The combined effect of the “Notice” and the “Guidelines” will profoundly shape China’s future digital finance ecosystem—and may accelerate the fragmentation of the global regulatory landscape.
Domestically, a clear “dual-track” digital finance ecosystem is now taking shape. Track One is the “fully closed retail track”: any trading, financing, or derivatives activities involving cryptocurrencies and speculative tokens—targeted at ordinary domestic investors—will be permanently and thoroughly banned, forming a “closed-loop” security zone largely insulated from the global, public-blockchain–driven crypto ecosystem. Track Two is the “limited-open institutional and cross-border track”: applications based on consortium or permissioned blockchain technologies—oriented toward serving the real economy and cross-border capital flows—will be encouraged and developed. The research, development, and application of the Digital Yuan (e-CNY), along with future state-led blockchain infrastructure for specific financial asset registration, trading, and settlement, will serve as the core pillars of this track. RWA innovation will be permitted only strictly within Track Two and solely along the pathway defined by the “Guidelines.”
From a global perspective, China’s regulatory path diverges fundamentally from the “compliance pathways” being explored by major economies such as the U.S. and the EU—namely, incorporating crypto assets into existing securities or commodities regulatory frameworks. China has chosen a distinctive model of “sovereignty-first, risk-isolation, pilot-based innovation.” This choice stems not merely from financial stability considerations, but more deeply reflects China’s defense of core national interests—including monetary sovereignty, capital account management, data security, and cross-border data flows. Such divergence implies further fragmentation of the global digital asset market—into regional markets differing in technical standards, asset classes, and investor composition. China’s choice offers an alternative regulatory paradigm for other emerging economies prioritizing financial sovereignty and control capacity.
V. Far-Reaching Impacts and Future Outlook: Redefining the “Red Line” and the “Navigation Route”
In summary, the policy package released in early 2026 carries profound and multifaceted implications. For market participants, it delivers a definitive “clear-out signal.” There is no remaining room for commercial operations within China related to virtual currencies or unauthorized digital assets—and individual participation now faces extremely high legal and financial risks. Fantasies of “policy relaxation” are no longer realistic. The sole viable opportunity lies on one path: abandoning short-term speculative thinking entirely, deeply internalizing national strategic intent, and undertaking long-term, arduous technological and business-model innovation—strictly aligned with serving the real economy, complying with cross-border capital management policies, and leveraging officially sanctioned technological pathways.
From the national strategic perspective, this policy package represents an active “mine-clearing” and “foundation-laying” exercise for China’s financial infrastructure. With unprecedented intensity, it clears away “weeds”—potential disruptions to core financial system stability, erosion of monetary sovereignty, and social risks—to pave the ground for the next phase: “sowing” nationally controlled, sovereign digital financial infrastructure. The strictest prohibitions often herald the most deliberate preparations. It is foreseeable that China’s future focus in blockchain finance will center on central bank digital currencies (CBDCs), blockchain platforms for trade finance, and standardized digital asset trading—all led by “national teams.”
Ultimately, this policy package redraws China’s non-negotiable “red line” amid the turbulent global transformation of digital finance—namely, national security, financial stability, and the safety of people’s property—and simultaneously redefines the “navigation route” available for exploration: technology must empower the real economy; innovation must comply with regulation; and development must serve national strategy. It signals China’s commitment to independently and autonomously shaping its digital finance future—according to its own rhythm and logic. The establishment of this new paradigm is not merely a regulatory upgrade—it is a profound national financial strategic choice whose impact will reverberate for the next decade and beyond.
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