Broader restrictions take shape

China’s regulators have moved to deepen their longstanding prohibition on cryptocurrency activities by issuing new guidelines that ban unauthorized offshore issuance of yuan-pegged stablecoins.

The notice, issued jointly by the central bank and other state agencies, reinforces the message that virtual currencies have no legal tender status and that related business activities are illegal without explicit regulatory approval. This includes both onshore and offshore issuance of digital assets tied to cryptocurrencies.

The move reflects China’s continued emphasis on maintaining strict control over digital financial activities while supporting its own state-issued digital currency.

Stablecoins and offshore issuance blocked

A key change in the new guidelines is the ban on unauthorised offshore issuance of stablecoins pegged to the yuan.

Stablecoins, which are cryptocurrencies designed to maintain a stable value relative to traditional currencies, have previously operated in a regulatory grey area. Chinese authorities now say that, without approval, domestic entities and their controlled offshore counterparts may not issue virtual currencies overseas, including yuan-linked stablecoins.

Regulators argue that allowing such issuance could undermine monetary sovereignty by creating fungible instruments that behave like currency without the safeguards that apply to legal tender.

Expanded scrutiny for crypto-linked tokens

In addition to stablecoins, the new rules tighten oversight of other types of crypto-linked tokens, particularly those backed by onshore assets but issued abroad.

Authorities now require strict vetting of any offshore token issuance tied to Chinese assets. These measures are designed to curb speculative activities and prevent financial instability risks associated with loosely regulated token markets.

The updated guidelines also reiterate that virtual currencies, whether issued domestically or abroad, do not have legal status in China and that related business activities fall under “illegal financial activities” unless explicitly authorized by regulators.

Financial institutions warned against crypto services

Chinese regulators went further by cautioning financial institutions against providing services to virtual currency-related businesses. Banks and clearinghouses have been reminded that involvement in crypto activities without proper licensing could expose them to regulatory enforcement.

This reflects a broader effort to isolate virtual currency markets from the domestic financial system while preserving layers of control over digital financial flows connected to China.

Real-world asset tokenisation remains regulated

While the clampdown focuses on speculative crypto activity, there are signs China is separating real-world asset (RWA) tokenisation from general crypto restrictions.

Certain tokenisation efforts tied closely to regulatory frameworks and legitimate asset classes may be allowed to operate under clear oversight, provided they meet strict vetting and filing requirements. That distinction underscores Beijing’s intent to maintain financial stability while managing innovation in selected areas.

What this means for global markets

China’s latest moves reaffirm its cautious stance toward cryptocurrencies, contrasting with other major markets that are exploring regulated frameworks for digital assets. The ban on offshore issuance of yuan-pegged stablecoins, in particular, signals a firm prioritization of monetary control and regulatory authority.

For global investors and crypto firms, these developments may reinforce perceptions of regulatory fragmentation, where different jurisdictions pursue divergent strategies on digital asset oversight.

In practice, this could influence how international firms structure their token products and compliance functions.