China’s Crypto Ban: Stablecoins, RWA, and the Digital Yuan – What’s Next?

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China is once more tightening the screws on crypto, as if the digital realm were a mischievous pup needing a firm hand. The People’s Bank of China and seven other government agencies released a revised joint notice on Friday, banning unauthorized offshore issuance of yuan-pegged stablecoins. The notice also brings RWA tokenization under regulatory control for the first time, which is about as thrilling as a lecture on the history of taxation.

The agencies, with all the solemnity of a church sermon, declared that these stablecoins “perform some of the functions of fiat currencies,” and warned that their unregulated circulation could threaten the yuan’s stability. One might ask, what’s next? A warning that rain might fall? The rules apply to both domestic and foreign entities, including overseas branches of Chinese firms-because why let a little thing like geography get in the way of a good crackdown?

What Do the New Rules Cover?

The notice, with the precision of a surgeon, reaffirms that crypto has no legal tender status in China. All crypto-related business activities remain classified as “illegal financial activities”-a term that sounds more like a criminal charge than a regulation. Financial institutions are warned against offering banking or clearing services to crypto businesses, as if they were offering tea to a dragon. Mining operations continue to face enforcement, and businesses can no longer use words like “stablecoin,” “RWA,” or “cryptocurrency” in their names-because, heaven forbid, they might sound too modern.

A Hidden Opening for RWA?

Here’s where it gets interesting: despite the ban language, the notice seems to create a regulated path for RWA tokenization, which was previously in a grey area. It’s like a magician’s trick-what’s hidden in the hat is suddenly in the spotlight. Louis Wan, CEO of Unified Labs, said, “The biggest breakthrough is a clear separation between virtual currencies and RWA.” A clear separation? More like a clear attempt to confuse the public. Alex Zuo added, “This means China is allowing the issuance of offshore tokens based on onshore assets.” So, they’re allowing the same old game but with a new name.

Digital Yuan Dominance

Winston Ma, an adjunct professor at NYU, said China’s central bank is highlighting that only its own digital yuan is legitimate. Then, in a move that would make a magician proud, China allowed commercial banks to pay interest on digital yuan wallets starting January 1, 2026-clearly pushing e-CNY adoption while shutting out private alternatives. Crypto Twitter has been exploding with reactions, as if the internet were a fireworks show. Benjamin Cowen, CEO of Into The Cryptoverse, summed it up: “It wouldn’t be a bear market if China wasn’t banning crypto.” A sentiment as timeless as the moon’s phases.

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2026-02-07 12:47