The People's Bank of China, China Securities Regulatory Commission and other eight departments recently jointly issued the "Notice on Further Preventing and Dealing with Risks Related to Virtual Currency" (hereinafter referred to as the "Notice"). The Notice reiterates that virtual currency does not have the same legal status as legal tender, and conducting virtual currency related business activities within the country is illegal financial activity. Overseas units and individuals are not allowed to illegally provide virtual currency related services to domestic entities in any form. Officials from the People's Bank of China and the China Securities Regulatory Commission stated that recently, speculative activities related to the tokenization of virtual currencies and real-world assets (RWA) have occurred due to various factors. The release of the Notice is conducive to further improving regulatory policies, preventing and dealing with risks related to virtual currency and RWA tokenization businesses, and maintaining national security and social stability. Strictly prohibit business activities related to virtual currency. The Notice clearly states that virtual currency does not have the same legal status as legal tender. Virtual currencies such as Bitcoin, Ethereum, and Tether have the main characteristics of being issued by non monetary authorities, using encryption technology and distributed ledgers or similar technologies, and existing in digital form. They do not have legal solvency and should not and cannot be used as currency in the market. The above-mentioned person in charge stated that at present, virtual currencies cannot effectively meet the requirements of customer identity recognition, anti money laundering, and other aspects, and there is a risk of being used for illegal activities such as money laundering, fundraising fraud, and illegal cross-border transfer of funds; Virtual currency relies on blockchain technology, supports peer-to-peer transactions, breaks through the physical concept of "borders", and related risks are easily transmitted across borders. International financial organizations and central banks and other financial management departments generally adopt a cautious attitude towards this; Stablecoins pegged to legal tender indirectly fulfill some of the functions of legal tender in circulation and use, which is related to monetary sovereignty. Based on this, the "Notice" clearly states that virtual currencies are subject to a prohibitive policy within the country, and related business activities are illegal financial activities that are strictly prohibited and resolutely banned in accordance with the law; Without the consent of relevant departments in accordance with laws and regulations, domestic entities and their controlled overseas entities are not allowed to issue virtual currencies overseas; Without the consent of relevant departments in accordance with laws and regulations, no domestic or foreign unit or individual may issue stablecoins pegged to RMB overseas. Regarding the "mining" behavior of virtual currencies, the "Notice" proposes that the National Development and Reform Commission, together with relevant departments, strictly control the "mining" activities of virtual currencies and continue to promote the rectification of virtual currency "mining" activities. Provincial governments comprehensively review and shut down existing virtual currency "mining" projects, strictly prohibit the addition of new "mining" projects, and prohibit "mining machine" production enterprises from providing various services such as "mining machine" sales within the country. According to the reporter's analysis, for a long time, there has been a policy stance in China that prohibits virtual currency related business activities. In 2013, the People's Bank of China and five other departments jointly issued the "Notice on Preventing Bitcoin Risks", which clarified that Bitcoin cannot and should not be used as a currency in the market; The Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation issued in 2021 further clarifies that stablecoins such as Bitcoin, Ethereum, and Tether do not have the same legal status as legal tender, and conducting virtual currency related business activities within the country is illegal financial activity and strictly prohibited. Conducting RWA tokenization activities within the country is considered illegal financial activity. In recent years, RWA tokenization has developed rapidly, and relevant countries and regions have strengthened supervision through various means such as strengthening legislation and improving rules. The Notice clearly states that RWA tokenization mainly refers to the use of encryption technology and distributed ledger or similar technologies to convert the ownership and income rights of assets into tokens (tokens) or other equity and bond certificates with token (token) characteristics, and to conduct issuance and trading activities. Industry insiders have stated that RWA tokenization involves financing and trading activities through the issuance of tokens (tokens) or other equity and bond certificates with token (token) characteristics, which carry multiple risks, including false asset risk, business failure risk, speculation risk, etc. According to the Notice, conducting RWA tokenization activities and providing relevant intermediary and information technology services within the country, suspected of illegal issuance of token tickets, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising and other illegal financial activities, should be prohibited. Overseas units and individuals shall not illegally provide RWA tokenization related services to domestic entities in any form. The above-mentioned person in charge stated that conducting RWA token activities without authorization often involves illegal fundraising, fraud, illegal issuance of token tickets, unauthorized public issuance of securities, illegal operation of securities and futures business, and other illegal financial and criminal activities. For this reason, the Notice clearly states that relevant illegal financial activities and criminal activities will be severely cracked down on, and once discovered, those responsible will be held accountable in accordance with the law. Strict supervision of domestic entities conducting RWA tokenization related businesses overseas. Regarding domestic entities conducting RWA tokenization related businesses overseas, the Notice emphasizes that domestic entities directly or indirectly conducting RWA tokenization business in the form of foreign debt overseas, or conducting asset securitization and equity based RWA tokenization business overseas based on domestic asset ownership, income rights, etc. (hereinafter referred to as domestic equity), shall be strictly supervised by relevant departments such as the National Development and Reform Commission, China Securities Regulatory Commission, and State Administration of Foreign Exchange in accordance with the principle of "same business, same risk, same rules" in accordance with their respective responsibilities and in accordance with laws and regulations. The Notice specifies that for other forms of RWA tokenization business conducted overseas by domestic entities based on domestic rights and interests, the China Securities Regulatory Commission, in conjunction with relevant departments, shall supervise them according to their respective responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business. At the same time, the Notice specifies that domestic institutions such as financial institutions, intermediaries, and information technology service providers are not allowed to provide services for RWA tokenization business and related financial products without consent; Internet enterprises shall not provide RWA token business with online business premises, business display, marketing publicity, payment diversion and other services; Intermediary agencies and information technology service agencies that provide services for RWA tokenization business conducted directly or indirectly overseas based on domestic rights and interests shall strictly comply with laws and regulations, strengthen business and risk control, and report relevant business development information to relevant management departments for approval or reporting. (New Society)