Author: Huobi Growth Academy
summary
On February 6, 2026, China's financial regulatory system simultaneously released two highly significant policy documents: the "Notice on Further Preventing and Handling Risks Related to Virtual Currencies" (Yinfa [2026] No. 42) jointly issued by the People's Bank of China and eight other ministries, and the "Regulatory Guidelines on the Issuance of Asset-Backed Securities Tokens Overseas by Domestic Assets" launched by the China Securities Regulatory Commission. These two documents, one prohibiting and one guiding, one domestic and one foreign, together constitute a logically consistent and clearly targeted regulatory package. This marks a new stage in China's regulation of digital financial innovation, represented by blockchain technology, moving from early "campaign-style clearing" and "risk warnings" to "institutional construction" and "strategic guidance." This policy adjustment is not simply a matter of tightening regulations, but rather a top-level design aimed at balancing risk prevention and innovative development, and reshaping the future financial infrastructure landscape, based on a deep understanding of global trends and the nature of the technology. Its core spirit can be precisely summarized as: implementing an "ironclad encirclement" of domestic retail speculation, and opening a "compliant narrow gate" for cross-border innovation serving the real economy.
I. Comprehensive Upgrade and Precise Characterization: Blocking All Paths to Systemic Risk
This "Notice" first and foremost demonstrates a strategic expansion of regulatory scope and an unprecedented strengthening of its qualitative implications. Its most significant feature is the explicit inclusion of "Real-World Asset Tokenization" (RWA) within the core of regulation, placing it under the same rigorous scrutiny as virtual currencies. This move is both forward-looking and decisive. RWA, as a global fintech trend that digitizes and trades traditional assets (such as bonds, real estate income rights, and commodities) through blockchain, is essentially an iteration of asset securitization technology. If left unchecked, it could very well evolve into a "technological black channel" circumventing existing core regulatory frameworks such as securities issuance review, information disclosure, and investor suitability management, breeding more complex problems such as illegal fundraising, fraud, and the cross-contagion of financial risks. The "Notice" explicitly states that conducting unapproved RWA activities within China constitutes illegal financial activities, including the illegal issuance of token vouchers, unauthorized public offerings of securities, and illegal operation of futures businesses. This definition completely eliminates any illusions of using "technological innovation" as a pretext for "regulatory arbitrage," and establishes the unshakable fundamental principle that "no matter how the technology changes, financial activities must be licensed and subject to regulation."
At the same time, the "Notice" provides a more resolute and thorough characterization of existing risks. It not only reiterates the non-monetary nature of cryptocurrencies such as Bitcoin, but also creatively designates "stablecoins pegged to fiat currencies" as "effectively fulfilling some functions of fiat currencies," and strictly prohibits the issuance of any unapproved stablecoins pegged to the RMB. This provision demonstrates strategic foresight, aiming to nip any potential challenges that could erode the RMB's sovereign currency status and build a parallel settlement system in the digital space in the bud. By explicitly defining all cryptocurrency-related business activities (including exchange, market making, information intermediation, and derivatives trading) as "illegal financial activities" and repealing the old notice from 2021, regulators convey a firm determination to eliminate existing risks and leave no room for ambiguity.
II. Building a comprehensive, end-to-end "firewall": a three-dimensional isolation from funds to information.
If defining a position is a declaration of stance, then the regulatory enforcement framework constructed in the "Notice" demonstrates a powerful and systematic ability to translate that stance into reality. It deploys a comprehensive, penetrating regulatory network covering the entire chain of "capital flow, information flow, and technology flow," aiming to physically isolate risks.
At the level of capital flows, regulatory requirements have reached an unprecedented level of stringency. All financial institutions and non-bank payment institutions are completely prohibited from providing any form of service for related activities, from account opening, fund transfers, clearing and settlement, to product issuance, inclusion of collateral, and insurance business, effectively closing off financial channels. This is tantamount to severing the "umbilical cord" between the digital asset sector and the mainstream financial system, preventing it from obtaining legitimate liquidity input and credit support.
On the information flow and marketing front, regulation is simultaneously exerting force both online and offline. Online, internet companies are strictly prohibited from providing online spaces, commercial displays, marketing promotions, and paid traffic redirection, and are required to proactively report leads and provide technical assistance. Offline, market regulators are prohibiting the use of terms such as "virtual currency" and "RWA" in company registration names and business scopes, and are strengthening advertising supervision. This combined approach aims to eliminate the "visibility" and "legitimacy implications" of digital assets in the public sphere, reducing speculative fervor and participation from a social cognitive perspective—a risk prevention measure that delves into the social psychological level.
At the technical and physical layer, the crackdown on cryptocurrency "mining" activities continues to deepen, clarifying the overall responsibility of provincial governments, strictly prohibiting new projects, and clearing existing ones. More importantly, the policy innovatively introduces a "blocking of overseas services" clause. It explicitly states that "overseas entities and individuals shall not illegally provide cryptocurrency-related services to domestic entities in any form," and stipulates that those assisting within China will be held accountable. This clause, with extraterritorial effect, combined with strict control over cross-border payment channels, effectively constructs a "financial digital boundary" for the global internet, posing a strong legal deterrent to any overseas exchanges or DeFi protocols attempting to serve Chinese users.
III. Opening the Only "Narrow Gate to Compliance": The Strategic Intent of the CSRC's "Guidelines"
While the "Notice" erected a tight wall, the CSRC's "Guidelines" meticulously designed and opened a highly restricted but significant "door." This door leads to only one specific destination: allowing the issuance of asset-backed securities (ABS) tokens overseas, backed by domestic assets or cash flow.
This is by no means an exception to the rule for cryptocurrency speculation, but rather a precise "guidance" of the market, designed with extremely high strategic considerations. First, its business model is strictly limited: the underlying assets must be domestic tangible assets or their revenue rights that generate stable cash flow (such as infrastructure fee rights, trade receivables, leased assets, etc.); the issued tokens must be ABS tokens that conform to financial logic; and the issuance market and investors must be strictly limited to overseas markets. This ensures that this innovative activity is closely anchored to the real economy, serves the genuine needs of enterprises for cross-border financing, and is completely isolated from the domestic retail speculative market.
Secondly, its regulatory approach is extremely stringent: it adopts a model of "domestic entities filing with the China Securities Regulatory Commission (CSRC) in advance," rather than simply reporting afterward. Filing entities must submit a complete set of overseas issuance documents and undergo thorough scrutiny of the authenticity of the underlying assets, the compliance of the transaction structure, and the effectiveness of risk isolation. This involves earlier and deeper regulatory intervention than traditional overseas bond issuance or listing, reflecting the regulatory philosophy of "same business, same risks, same rules," ensuring that innovation remains within the regulatory purview.
The opening of this "narrow door" carries at least three strategic intentions: First, serving real economy financing: Providing a pilot channel for high-quality domestic enterprises to leverage blockchain technology to improve the efficiency and reduce costs of cross-border asset securitization is a direct manifestation of fintech empowering the real economy. Second, accumulating regulatory experience and talent: In a risk-controlled "overseas sandbox," regulatory agencies, financial institutions, and legal intermediaries can closely observe, understand, and manage the entire process of asset tokenization, accumulating valuable regulatory experience and cultivating professional talent for potentially larger-scale financial digital transformations in the future. Third, participating in shaping international rules: Through proactive regulation and practice, China can accumulate a voice in the cutting-edge field of asset tokenization, avoiding a passive position in the future formation of international rules—a far-reaching strategic move in major power financial competition.
IV. The 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 differentiation of the global regulatory landscape.
Within China, a clear outline of a "dual-track" digital finance ecosystem is emerging. The first track is a "completely closed retail track": any trading, financing, or derivatives activities related to cryptocurrencies and speculative tokens targeting ordinary domestic investors will be permanently and thoroughly prohibited, forming a "domestic circulation" security zone largely isolated from the global public blockchain-dominated crypto ecosystem. The second track is a "limitedly open institutional and cross-border track": applications based on consortium blockchains or permissioned blockchains, aimed at serving the real economy and cross-border capital flows, will be encouraged and developed. The research and application of the digital yuan (e-CNY), and the future state-led blockchain infrastructure for the registration, trading, and settlement of specific financial assets, will become the core pillars of this track. RWA's innovation can only proceed strictly within the second track, following the path defined in the "Guidelines."
From a global perspective, China's regulatory approach fundamentally diverges from the compliance path being explored by major economies such as the US and the EU, which involves integrating crypto assets into existing securities or commodity regulatory frameworks. China has chosen a unique model prioritizing sovereignty, risk isolation, and pilot innovation. This is not only for financial stability considerations but also, at a deeper level, for safeguarding core national interests such as monetary sovereignty, capital account management, data security, and cross-border flows. This divergence implies that the global digital asset market may further fragment, forming regional markets with different technological standards, asset classes, and investor structures. China's choice provides another potential regulatory paradigm for other emerging economies that prioritize financial sovereignty and control.
V. Profound Impact and Future Outlook: Redefining Red Lines and Route Lines
In conclusion, the policy documents released in early 2026 have far-reaching and complex implications. For market participants, this is a definitive "clearing signal." All commercial operations related to virtual currencies and unapproved digital assets within China have no room to survive, and related individual participants face extremely high legal and financial risks. The illusion of a "policy thaw" is no longer realistic. The real opportunity lies only in one path: completely abandoning short-term speculative thinking, deeply understanding national strategic intentions, and engaging in long-term and arduous technological and business model innovation in a direction that serves the real economy, complies with cross-border capital management policies, and relies on officially recognized technological pathways.
From a national strategic perspective, this policy package represents a proactive effort to "clear mines" and "lay the foundation" for financial infrastructure. It has cleared away, with unprecedented force, potential threats to the stability of the core financial system, erosion of monetary sovereignty, and the generation of social risks, paving the way for the next step of "planting" independently controllable national-level digital financial infrastructure. The strictest bans often foreshadow the most prudent preparations. It is foreseeable that China's future efforts in blockchain finance will focus on areas led by state-owned enterprises, such as central bank digital currencies, trade finance blockchain platforms, and the digital trading of standardized assets.
Ultimately, this policy set new, inviolable red lines for China amidst the turbulent global digital finance revolution—namely, national security, financial stability, and the safety of people's property; it also redefined the routes for exploration—technology must empower the real economy, innovation must be subject to regulation, and development must serve strategic goals. It declared that China will independently shape its future digital finance landscape according to its own pace and logic. The establishment of this new paradigm is not merely an upgrade in regulation, but a profound strategic choice for national finance, the impact of which will continue to manifest for the next decade and beyond.
