China plans to tighten its crackdown on virtual currencies, starting with a ban on unauthorised offshore issuance of yuan-pegged stablecoins.
According to a notice published on the central bank’s website, authorities will also strictly vet offshore issuance of tokens backed by Chinese onshore assets.
“The biggest breakthrough is a clear separation between virtual currencies and real-world assets (RWAs),” said Louis Wan, CEO of Unified Lab according to Reuters.
“Virtual currencies will still be outlawed, but RWA is being included in the regulatory system. For China’s RWA business, this is a milestone.”
In a joint statement from the People’s Bank of China and several other agencies and regulators, business activities related to virtual currencies were deemed to be “illegal financial activities.”
While the statement largely restates Beijing’s existing ban on cryptocurrency, some observers see indications that China is laying the groundwork for a legal framework around RWA tokenisation.
“To some extent, this means China is allowing the issuance of offshore tokens based on onshore assets,” said Alex Zuo, senior vice president of Singapore-based crypto custodian provider Cobo, according to Reuters. “Stablecoins pegged to fiat currencies effectively perform some of the functions of fiat currencies in circulation.”
