What to Know
- China has officially labeled RWA tokenization as illegal financial activity with no approval from regulators.
- The warning applies to both China-based operators and overseas projects supported by people or firms in China.
- Service providers, promoters, and tech teams can also face legal action if linked to RWA projects.
China has taken a very strong position against Real-World Asset tokenization. In a joint notice released by several major financial industry bodies, RWA tokenization has been officially labeled as an illegal financial activity.
The notice was jointly issued by seven powerful industry associations, including the National Internet Finance Association of China, along with banking, securities, futures, asset management, listed companies, and payment and clearing associations. According to the document, RWA tokenization involves raising money and trading through tokens that claim to be linked to real-world assets such as real estate, commodities, or income-producing projects. Regulators say these activities have not been approved by any Chinese authority and may fall under illegal fundraising, illegal securities issuance, or other banned financial activities.
Why China Is Taking This Step
Lawyer Liu Honglin said regulators have now clearly defined RWA as illegal, and both domestic and international players should pay close attention. He described the notice as shocking because it shows a unified and firm stance across different financial sectors. This kind of action usually happens only when authorities believe a risk could affect the entire financial system.
For the first time, RWA was named directly in an official risk warning. It was grouped together with stablecoins, worthless tokens often called “air coins,” and crypto mining as a major form of illegal virtual currency activity. This sends a strong message that RWA is no longer seen as a new idea waiting for clear rules, but as a risky model that needs to be stopped.
Reasons RWA Is Considered Illegal
Regulators highlighted three major concerns. First, RWA is treated as a financing and trading activity. No matter how advanced the technology is or how real the assets may seem, issuing tokens and selling them to the public is still considered fundraising. This puts RWA directly under existing financial laws that already ban such activities without approval.
Second, authorities point to risks like fake or exaggerated assets, poor project management, and heavy speculation. Even projects that claim to be transparent and well-structured are seen as risky because token ownership does not guarantee real legal rights over the underlying assets. Third and most importantly, regulators clearly stated that no RWA activity has ever been approved in China. This means all RWA-related projects, platforms, services, and middlemen currently operating have no legal basis at all.
No Grey Area Left
In recent years, many crypto teams tried to move from stablecoins to RWA, hoping that using “real assets” or operating offshore would help them avoid trouble. This new notice shuts down that idea completely. Regulators made it clear that RWA can still count as illegal fundraising, illegal securities issuance, or even illegal futures trading, depending on how the tokens are sold and traded.
The warning also comes as RWA-related scams have increased. Criminals have used the RWA label to attract investors, often promising stable returns and safe assets. Authorities now say they see RWA at the same risk level as pyramid schemes and fake token projects.
One of the most serious parts of the notice is its warning about shared responsibility. Chinese individuals or companies that support overseas RWA projects can also face legal action. This includes developers, marketers, consultants, promoters, and service providers. Even claiming to be “just a tech provider” is no longer a defense. If someone knows, or should reasonably know, that a project is involved in RWA tokenization, they can be held responsible.
Final Thoughts
For teams based in China, the message is simple: RWA has no future there. The entire chain from asset providers to developers and promoters now carries legal risk. For overseas projects, China is no longer a market waiting for clarity. It has clearly rejected RWA altogether.
Industry players now face a clear choice: fully move operations to other jurisdictions with their own rules, or abandon RWA tokenization entirely. China has made it clear that this is not a pause or a warning, it is a firm rejection.
