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《The New York Times》: Trump Is Pushing Cryptocurrency Toward a Capital Frenzy
Original Title: What Trump's Embrace of Crypto Has Unleashed
Original Authors: David Yaffe-Bellany, Eric Lipton, The New York Times
Translation: Chopper, Foresight News
This summer, a group of executives pitched a business plan to Wall Street financier and former Trump administration advisor Anthony Scaramucci. They wanted Scaramucci to join a publicly listed company with a unique strategy: by hoarding a significant amount of cryptocurrency assets, enhancing the company's appeal to investors.
"They didn't really need to sell me on it," Scaramucci recalled. Shortly after, he joined three unknown companies employing this strategy as an advisor, and the "entire partnership process went very smoothly."
However, this wave of enthusiasm did not last long. With the cryptocurrency market plummeting this fall, the stock prices of the three companies Scaramucci was involved with plunged, with the worst-performing one dropping over 80%.
The rise and fall of these companies epitomize the cryptocurrency craze ignited by Trump. This self-proclaimed "first cryptocurrency president," not only ended regulatory crackdowns on cryptocurrency companies but also openly promoted cryptocurrency investment in the White House, signed bills supporting cryptocurrency development, and even issued a meme coin named TRUMP, propelling this once-niche sector into the forefront of the global economy.
Today, the ripple effects of Trump's cryptocurrency endorsement are gradually becoming apparent.
This year, a large number of boundary-breaking cryptocurrency startups have emerged, drawing more people into this volatile market. Over 250 publicly listed companies have started hoarding cryptocurrency—these digital assets exhibit price volatility similar to traditional investments such as stocks and bonds.
In 2024, former Trump advisor Anthony Scaramucci attends a Bitcoin conference in the UAE
A wave of companies are launching innovative products, lowering the barriers to including cryptocurrency in brokerage accounts and retirement plans. Simultaneously, industry executives are lobbying regulatory bodies, planning to issue cryptocurrency tokens pegged to publicly listed company stocks, creating a cryptocurrency-based stock trading market.
This wave of radical innovation has exposed many issues. Over the past two months, mainstream cryptocurrency prices have experienced a significant plunge, leading to a crisis for enterprises heavily invested in crypto assets. Other emerging projects have also raised concerns from economists and regulatory bodies, as market risks continue to accumulate.
The core concern that has raised alarms from various parties lies in the ongoing expansion of leverage. By the fall of this year, publicly listed companies had heavily borrowed to purchase cryptocurrency; investors' positions in cryptocurrency futures contracts exceeded $200 billion, with many of these trades relying on leveraged funds, potentially bringing in huge profits while also carrying the risk of liquidation.
Of even greater concern is that a series of new initiatives in the cryptocurrency industry have tightly linked the crypto market with the stock market and other financial sectors. Should a crisis erupt in the cryptocurrency market, the risk may spread to the entire financial system, triggering a chain reaction.
"Today, the boundary between speculation, gambling, and investment has become increasingly blurred," said Timothy Massad, who served as Assistant Secretary of the Treasury for Financial Stability after the 2008 financial crisis. "This situation deeply worries me."
White House Press Secretary Karoline Leavitt responded by stating that Trump's policies are "driving innovation, creating economic opportunities for all Americans, and helping the U.S. become a global cryptocurrency hub."
Cryptocurrency industry executives argue that these emerging projects demonstrate the potential of blockchain technology to reshape the outdated financial system. In their view, market volatility presents a profitable opportunity.
"High risk often comes with high returns," said Duncan Moir, CEO of 21Shares, a company issuing cryptocurrency investment products. "Our mission is to bring these investment opportunities to more people."
The rise of this wave of innovation is inseparable from a comprehensive relaxation of the regulatory environment, marking the most favorable regulatory window for cryptocurrency companies. For many years prior, the U.S. Securities and Exchange Commission (SEC) has been at odds with the cryptocurrency industry; however, in January of this year, the agency established a cryptocurrency special task force and has held meetings with dozens of companies seeking new rule support or product listing approval.
A spokesperson for the U.S. Securities and Exchange Commission stated that the agency is committed to "ensuring that investors have access to full information to make informed investment decisions."
U.S. Securities and Exchange Commission headquarters in Washington, D.C.
It is worth noting that many of these emerging companies are associated with the continuously expanding cryptocurrency business empire of the Trump family, a connection that has blurred the line between business and government.
This summer, executives from Trump's cryptocurrency startup World Liberty Financial announced joining the board of publicly traded company ALT5 Sigma. The company, originally focused on recycling operations, is now planning to raise $1.5 billion to enter the cryptocurrency market.
Capital Frenzy: An Unbridled Crypto Gamble
Crypto enthusiasts have dubbed this high-risk investment frenzy fostered by the Trump administration as the "Summer of Crypto Treasury Companies."
Crypto Treasury Companies (CTCs) refer to publicly traded companies with hoarding cryptocurrencies as their core objective. Data from crypto advisory firm Architect Partners shows that nearly half of these emerging companies focus on hoarding Bitcoin, the most well-known cryptocurrency, while dozens of other companies have announced plans to acquire meme coins like Dogecoin.
2025 Monthly Crypto Treasury Company Establishment Count. Data Source: Architect Partners, as of December 16.
Data Source: Architect Partners, as of December 16, 2025 Monthly Crypto Treasury Company Establishment Count.
The modus operandi of these companies is often straightforward: a group of executives target a niche publicly traded company (such as a toy manufacturer) in the open market, persuade it to transition to a cryptocurrency hoarding business, collaborate with the company to raise hundreds of millions from high-net-worth investors, and ultimately use the funds to buy cryptocurrencies.
The core purpose is to involve more people in cryptocurrency investment by issuing traditional stock pegged to cryptocurrency prices. This strategy theoretically offers significant profit potential. Many investment funds and asset management firms have been cautious about direct cryptocurrency investments due to the complex and costly nature of cryptocurrency custody and the high risk of hacking.
Investing in Crypto Treasury Companies is akin to outsourcing the logistics of cryptocurrency storage and other operational tasks. However, these companies also carry significant risks: many companies were hastily established, and their management lacks experience in operating a publicly traded company. According to data from Architect Partners, these companies have collectively announced plans to borrow over $20 billion to purchase cryptocurrencies.
"Leverage is the main culprit of financial crises," warned Corey Frayer, a former cryptocurrency advisor at the U.S. Securities and Exchange Commission. "And the current market is fueling massive leverage."
Some cryptocurrency treasury companies have run into operational difficulties or management crises, leading to significant losses for investors.
Publicly listed company Forward Industries transformed into a cryptocurrency treasury company, heavily holding SOL. In September of this year, the company raised over $1.6 billion from private investors, and its stock price soared to nearly $40 per share.
Allan Teh from Miami manages assets for a family office and this year invested $2.5 million in Forward Industries. "Everyone at that time thought this strategy was foolproof, believing that cryptocurrency asset prices would continue to rise," recalled Allan Teh.
However, as the cryptocurrency market experienced a sharp decline, Forward Industries' stock price plummeted to as low as $7 per share this month. The company announced plans to buy back $1 billion worth of stock over the next two years, but this measure did not halt the stock's downturn.
"The music stopped, and the game ended. Now I'm starting to panic. Can I exit this unscathed?" Allan Teh has already lost around $1.5 million. "How much will the eventual loss be for this investment?" Forward Industries declined to comment on this.
The proliferation of cryptocurrency treasury companies has raised alarms at the U.S. Securities and Exchange Commission. "Clearly, we are very concerned about this," said agency Chairman Paul Atkins in an interview at a cryptocurrency conference in Miami last month. "We are closely monitoring the situation."
Behind this new track in cryptocurrency, there is strong support from the Trump family.
The founders of World Liberty Financial include Eric Trump, son of Trump, and Zach Witkoff
In August of this year, World Liberty Financial announced that the company's founders (including the president's son Eric Trump) would join the board of ALT5 Sigma. This publicly listed company plans to stockpile the cryptocurrency token WLFI issued by World Liberty Financial (Eric Trump's current title is Strategic Advisor and Board Observer).
This partnership seems to enable the Trump family to quickly profit. According to the revenue-sharing agreement published on the World Liberty Financial website, whenever WLFI token transactions occur, commercial entities under the Trump family umbrella can take a cut.
Subsequently, ALT5 Sigma's business situation took a sharp turn for the worse. In August, the company revealed that a senior executive of one of its subsidiaries was convicted of money laundering in Rwanda, and the board of directors is investigating other "undisclosed matters." Shortly after, ALT5 Sigma announced the suspension of the CEO's duties and the termination of contracts with two other executives.
Since August, the company's stock price has plummeted by 85%. A spokesperson for ALT5 Sigma stated that the company is "confident in the future development."
Flash Crash Nightmare: A Trillion-Dollar Market Cap Evaporation Overnight
The recent turmoil in the cryptocurrency market can be traced back to one night in October.
Driven by Trump's policies, the cryptocurrency market had been on a steady rise for most of the year. However, on October 10, Bitcoin, Ethereum, and dozens of other cryptocurrencies collectively experienced a sharp price drop, unleashing a flash crash.
The direct trigger for this crash was Trump's announcement of new tariffs on China, which caused severe global economic upheaval. The cryptocurrency market suffered a heavy blow due to the massive leverage funds that had been driving the market's rise.
On cryptocurrency trading platforms, traders can use their held crypto assets as collateral to borrow fiat currency or increase their cryptocurrency investment positions through leverage funds. Data from cryptocurrency research firm Galaxy Research shows that in the third quarter of this year, the global cryptocurrency lending volume grew by $200 billion in a single quarter, reaching a historical peak of $740 billion.
Previously, the riskiest cryptocurrency leverage trading mostly occurred in overseas markets. However, in July of this year, the largest cryptocurrency exchange platform in the U.S., Coinbase, announced the launch of a new investment tool that allows traders to leverage up to 10 times on Bitcoin and Ethereum futures prices. Prior to this, U.S. federal regulators had lifted restrictions on guidance related to such leverage trading, clearing the way for Coinbase's new product.
In July of this year, Coinbase exchange platform introduced a 10x leverage cryptocurrency trading tool
The flash crash in October, while not causing an industry catastrophe like the bankruptcies of numerous major cryptocurrency companies in 2022, sounded an alarm for the market, indicating the systemic crisis lurking in the cryptocurrency field.
The essence of leverage trading is that losses are multiplied when the market goes down. Trading platforms will force liquidation, selling off customers' collateral assets, a process that often further intensifies price declines.
The data from cryptocurrency data firm CoinGlass shows that on October 10, at least $19 billion worth of cryptocurrency leveraged trades were liquidated globally, affecting 1.6 million traders. The liquidation event primarily occurred on exchanges such as Binance, OKEx, and Bybit.
The sharp market downturn led to a surge in trading volume, causing several major exchanges to experience technical issues, preventing traders from transferring their funds promptly. Coinbase stated that some users experienced "delays or degraded performance during trading."
Tennessee-based software developer and cryptocurrency investor Derek Bartron revealed that his Coinbase account was frozen during the flash crash period. "I wanted to exit my positions, but I couldn't make any transactions," Derek Bartron said. "Coinbase effectively locked up users' funds, and we could only watch helplessly as the asset value plummeted."
Derek Bartron mentioned that in the days following the flash crash, his cryptocurrency portfolio lost around $50,000, partly due to the inability to exit his positions in time.
A Coinbase spokesperson responded by stating that the company provides automated risk management tools, "which functioned as intended during this market turbulence, and our trading platform remained stable throughout the event."
A Binance spokesperson acknowledged that the exchange "experienced technical issues due to the surge in trading volume" and stated that measures have been taken to compensate affected users.
Crazy Experiment: The Regulatory Dilemma of the Tokenization Wave
One summer night this year, cryptocurrency entrepreneur Chris Yin and Teddy Pornprinya donned formal attire and made an appearance at the Kennedy Center in Washington, D.C., attending a grand black-tie gala.
The gala was a star-studded event. Chris Yin, in a tuxedo he had bought just the night before, met with former Silicon Valley venture capitalist and Vice President of the United States, JD Vance; he and Teddy Pornprinya even had conversations with former hedge fund manager and current U.S. Treasury Secretary Scott Besent. The two even had a photo op with Trump, who gave a thumbs-up to the camera.
Chris Yin and Teddy Pornprinya's visit was to pave the way for their startup, Plume. This company is advancing an industry-disrupting innovation, attempting to extend cryptocurrency's underlying technology into a broader financial realm.
For months, Plume has been seeking approval from U.S. regulatory agencies, planning to build an online trading platform to issue crypto tokens pegged to real-world assets to customers, with assets ranging from listed company stocks to farms, oil wells, and various other entities.
Plume Founder Chris Yin and Teddy Pornprinya at the Empire State Building
Currently, Plume has launched such tokenized products in overseas markets, where customers can trade these asset tokens just like cryptocurrencies. However, this business, known as asset tokenization, is in a legal gray area in the U.S. The securities laws enacted decades ago have strict regulatory rules for the issuance of equity in various assets, requiring issuers to disclose detailed information to protect investor rights.
This year, asset tokenization has become the hottest concept in the cryptocurrency industry. Industry executives claim that tokenized stocks can make stock trading more efficient and create a round-the-clock global trading market. The U.S.-based cryptocurrency exchange Kraken has already launched encrypted technology-based stock trading services for customers in overseas markets.
Cryptocurrency industry executives state that cryptocurrency trading, based on public ledger records, is more transparent compared to the traditional financial system. "All transactions are traceable and auditable," said Arjun Sethi, CEO of Kraken. "There is almost no risk."
Representatives from Kraken and Coinbase have met with the U.S. Securities and Exchange Commission to discuss regulatory rules for tokenized assets; meanwhile, Plume is also seeking a legal pathway to expand its business in the U.S.
However, this race for tokenized products has raised concerns among current and former regulatory officials and executives of traditional financial giants.
In September of this year, a Federal Reserve economist warned that asset tokenization could lead to the transmission of cryptocurrency market risks to the entire financial system, "weakening policymakers' ability to maintain payment system stability under stress."
SEC Chairman Paul Atkins, on the other hand, has a positive view of tokenized stocks, calling it a "major technological breakthrough." "According to securities laws, the Commission has broad discretionary power to provide regulatory support for the cryptocurrency industry. I am determined to push this work forward," Atkins said at an asset tokenization industry roundtable in May of this year.
In order to drive the company's business compliance efforts, Chris Yin and Teddy Pornprinya took a series of actions. In May of this year, the two met with the U.S. Securities and Exchange Commission's cryptocurrency special task force; they also provided chart support for the White House cryptocurrency industry report; and established the Plume U.S. headquarters on the 77th floor of the Empire State Building.
At a black tie dinner in Washington this summer, Trump's staff showed a keen interest in the two founders. "They knew about Plume the company," Teddy Pornprinya recalled, "Everyone was familiar with our business."
Several weeks later, Plume announced a key partnership, establishing a business relationship with World Liberty Financial, a company under the Trump family.
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China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk
Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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