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Why does Hyperliquid earn less than Coinbase?
Original Article Title: Hyperliquid at the Crossroads: Robinhood or Nasdaq Economics
Original Author: @shaundadevens
Translation: Peggy, BlockBeats
Editor's Note: As Hyperliquid's trading volume approaches that of traditional exchanges, what truly deserves attention is no longer just "how large the volume is," but rather where it chooses to sit in the market structure. This article uses the traditional financial industry's "Broker vs. Exchange" division as a reference to analyze why Hyperliquid has proactively adopted a low-fee market layer positioning, and how Builder Codes and HIP-3, while amplifying the ecosystem, exert long-term pressure on platform fees.
Hyperliquid's path reflects the core issue that the entire crypto trading infrastructure is facing: once scale is achieved, how should profits be allocated.
The following is the original text:
Hyperliquid is processing perpetual contract trading volume close to Nasdaq levels, but its profit structure also exhibits "Nasdaq-level" characteristics.
In the past 30 days, Hyperliquid has cleared $205.6 billion in perpetual contract notional trading volume (approximately $617 billion on a quarterly annualized basis), but has generated only $8.03 million in fee revenue, resulting in an effective fee rate of about 3.9 basis points (bps).
This means that Hyperliquid's monetization method is more akin to a wholesale execution venue rather than a retail-oriented high-fee trading platform.
For comparison, Coinbase recorded $295 billion in trading volume in Q3 2025, but achieved $1.046 billion in trading revenue, implying an effective fee rate of about 35.5 basis points.
Robinhood's monetization logic in its crypto business is similar: its $80 billion in crypto asset notional trading volume resulted in $268 million in trading revenue, implying a fee rate of around 33.5 basis points; meanwhile, Robinhood's stock notional trading volume in Q3 2025 reached a high of $647 billion.
Overall, Hyperliquid has risen to the ranks of top-tier trading infrastructure in terms of trading volume, but in terms of fees and business model, it resembles a low-fee execution layer catering to professional traders rather than a retail-oriented platform.
The difference is not only reflected in the fee level, but also in the breadth of monetization dimensions. Retail platforms are often able to profit on multiple income "interfaces" simultaneously. In the third quarter of 2025, Robinhood generated a total of $730 million in trading-related revenue, along with $456 million in net interest income, and $88 million in other revenue (mainly from the Gold subscription service).
In contrast, Hyperliquid currently relies much more on trading fees, and these fees are structurally compressed at single-digit basis point levels at the protocol layer. This means that Hyperliquid's revenue model is more concentrated, more singular, and closer to a low-fee, high-throughput infrastructure role, rather than a retail platform that achieves deep monetization through multiple product lines.
This can be fundamentally explained by a positioning difference: Coinbase and Robinhood are broker/dealer/distribution businesses that leverage their balance sheet and subscription system for multi-layered monetization, while Hyperliquid is closer to the exchange layer. In the traditional financial market structure, the profit pool is naturally divided between these two layers.
Broker/Dealer vs. Exchange Model
In traditional finance (TradFi), the most fundamental distinction is the separation between the distribution layer and the market layer.
Retail platforms like Robinhood and Coinbase are located in the distribution layer, able to capture high-margin monetization facets, while exchanges like Nasdaq are positioned in the market layer, where their pricing power is structurally constrained, and their execution services are pushed by competition towards a commoditized economic model.
Broker/Dealer = Distribution Capability + Customer Balance Sheet
Brokers have control over customer relationships. Most users do not directly access Nasdaq but enter the market through brokers. Brokers are responsible for account opening, custody, margin and risk management, customer support, tax documents, etc., and then route orders to specific trading venues.
It is this "relationship ownership" that allows brokers to monetize in multiple ways beyond trading:
Funds and asset balances: cash aggregation interest spread, margin lending, securities lending
Product Bundling: Subscription Service, Feature Package, Bank Card / Robo-Advisor Product
Routing Economics: Brokerage controls order flow and can embed payment or revenue-sharing mechanisms in the routing chain
This is also why brokerages often earn more than trading venues: the profit pool is truly concentrated in the "distribution + balance" position.
Exchange = Matching + Rules + Infrastructure, Commission Limited
An exchange operates the trading venue itself: matching engine, market rules, deterministic execution, and infrastructure connection. Its main monetization methods include:
Trading Fees (continuously suppressed in highly liquid products)
Rebates / Liquidity Incentives (often most of the nominal fee rate is returned to the market maker in order to compete for liquidity)
Market Data, Network Connection, and Co-location
Listing Fee and Index Authorization
Robinhood's order routing mechanism clearly demonstrates this structure: the customer relationship is held by the brokerage (Robinhood Securities), and the order is then routed to a third-party market center, with the economic benefits during routing being distributed in the chain.
The true high-margin layer is at the distribution end, which controls customer acquisition, customer relationships, and all monetization aspects surrounding execution (such as order flow payment, margin, securities lending, and subscription services).
Nasdaq itself is in the low-margin layer. The products it offers are essentially highly commoditized execution capabilities and queue access rights, and its pricing power is strictly limited in the mechanism.
The reason is that: in order to compete for liquidity, trading venues often need to return a large portion of the nominal fee as maker rebates; regulators have set limits on access fees, limiting the fee space that can be charged; at the same time, order routing has high elasticity, and funds and orders can quickly switch between different trading venues, making it difficult for any single venue to raise prices.
This point is very intuitively reflected in the financial data disclosed by Nasdaq: the actual net revenue captured in its cash stock trading is usually only on the order of a fraction of a cent per share. This is a direct reflection of the structural compression of the profit space of market-level exchanges.
The strategic consequences of this low-profit margin are also clearly reflected in Nasdaq's revenue structure change.
In 2024, Nasdaq's Market Services revenue was $1.02 billion, accounting for 22% of the total revenue of $4.649 billion; a ratio that was as high as 39.4% in 2014 and still at 35% in 2019.
This continuous downward trend is highly consistent with Nasdaq's active shift from a market-volatility-dependent, profit-constrained execution business to a more regular and predictable software and data business. In other words, it is the structurally low-profit space at the exchange level that has driven Nasdaq to gradually shift its growth focus from "matching and execution" to "technology, data, and service-productization."
Hyperliquid as a "Market Layer"
Hyperliquid's approximately 4 basis points (bps) effective fee rate is highly aligned with its intentionally chosen market layer positioning. It is building an on-chain "Nasdaq-style" trading infrastructure:
A high-throughput matching, margin, and clearing system centered around HyperCore, utilizing a maker/taker pricing and market-making rebate mechanism, aiming to maximize execution quality and shared liquidity, rather than conducting multilayer monetization for retail users.
In other words, Hyperliquid's design focus is not on subscription, balances, or distribution-type revenue, but on providing commoditized yet extremely efficient execution and settlement capabilities—this is a typical characteristic of a market layer and an inevitable result of its low-fee structure.
This is reflected in the two most common structural splits that have not yet been truly implemented in the majority of cryptocurrency trading platforms but are very typical in Traditional Finance (TradFi):
One is the permissionless brokerage/distribution layer (Builder Codes).
Builder Codes allow third-party trading interfaces to be built on top of the core exchange and earn economic benefits independently. Among them, the Builder fee has a clear upper limit: a maximum of 0.1% (10 basis points) for perpetual contracts, and a maximum of 1% for spot, and fees can be set at the individual order level. This mechanism thus creates a competitive market at the distribution layer, rather than a single official app monopolizing user access and monetization rights.
Second is Permissionless Listing / Product Layer (HIP-3).
In traditional finance, exchanges usually control listing approvals and product creation. HIP-3 externalizes this function: developers can deploy a perpetual contract inheriting the HyperCore matching engine and API capabilities, while the specific market's definition and operation are the responsibility of the deployer.
In terms of the economic structure, HIP-3 clearly defines the revenue-sharing relationship between the exchange and the product layer: deployers of spot and HIP-3 perpetual contracts can retain up to 50% of the trading fees of the assets they deploy.
Builder Codes have already shown effectiveness on the distribution end: as of mid-December, approximately one-third of users did not trade through the native interface but through a third-party frontend.
The issue is that this distribution-friendly structure itself creates sustained pressure on the exchange layer's take rate:
1. Price compression.
Multiple frontends simultaneously selling the same underlying liquidity naturally converge competition towards the lowest comprehensive trading cost; meanwhile, Builder fees can be flexibly adjusted at the order level, further driving prices down.
2. Loss of monetization surface.
Frontends control onboarding, product bundling, subscription services, and the complete trading workflow, capturing the high-margin space of the brokerage layer; whereas Hyperliquid can only retain a thinner exchange layer take rate.
3. Strategic routing risk.
Once frontends evolve into true cross-exchange routers, Hyperliquid could be forced into wholesale execution competition, only able to defend order flow through fee reductions or increased rebates.
Overall, Hyperliquid is consciously choosing a low-profit-margin market layer positioning (through HIP-3 and Builder Codes), while allowing a high-margin brokerage layer to grow on top of it.
If Builder frontends continue expanding, they will increasingly determine the pricing structure facing users, control user retention and monetization interfaces, and gain bargaining power at the routing level, structurally putting long-term pressure on Hyperliquid's take rate.
Defend Distribution Rights and Introduce a Non-Exchange Profit Pool
The most direct risk is commoditization.
If a third-party front end can consistently undercut the native interface in price, and even achieve cross-site routing in the end, Hyperliquid will be pushed towards a wholesale execution-type economic model.
Recent design adjustments indicate that Hyperliquid is attempting to explore new revenue streams while trying to avoid this outcome.
Distribution Defense: Maintaining the Economic Competitiveness of the Native Front End
A previously proposed staking discount scheme allows Builders to stake HYPE to receive up to a 40% fee discount, effectively providing a structurally cheaper path for third-party front ends compared to the Hyperliquid native interface. The withdrawal of this scheme equates to the elimination of a direct subsidy for external distribution "price pressure."
At the same time, HIP-3 markets were initially positioned to be primarily distributed by Builders and not prominently showcased on the main front end; however, these markets have now begun to be displayed in the Hyperliquid native front end under strict listing standards.
This signal is very clear: Hyperliquid still maintains permissionless innovation at the Builder level but will not sacrifice its core distribution rights at the expense of external distribution.
USDH: Shifting from Transactional Liquidation to "Float" Liquidation
The launch of USDH aims to reclaim stablecoin reserve earnings that would have otherwise been captured outside the system. Its publicized structure involves a 50/50 split of reserve earnings: 50% to Hyperliquid and 50% for USDH ecosystem growth.
Additionally, the transaction fee discounts offered on USDH-related markets further reinforce this orientation: Hyperliquid is willing to sacrifice on a single transaction's economics to secure a larger, more sticky, balance-bound profit pool.
In effect, this introduces a revenue stream similar to an annuity for the protocol, the growth of which depends on the monetary base scale and not just nominal trading volume.
Portfolio Margin: Introducing Brokerage-Equivalent Financing Economics
Portfolio Margin unifies the margin for spot and perpetual contracts, allowing different exposures to offset each other and introducing a native lending loop.
Hyperliquid will retain 10% of the interest paid by borrowers, making the protocol's economics increasingly dependent on leverage utilization and interest rate levels, rather than just trade volume. This approach is closer to a broker/prime brokerage revenue model rather than a pure exchange logic.
The Path of Hyperliquid Toward a "Brokerage-Style" Economic Model
On the throughput front, Hyperliquid has already reached the scale of top-tier exchanges; however, in terms of monetization, it still resembles a market layer: with very high nominal trading volume, coupled with a single-digit basis point effective fee rate. The gap with platforms like Coinbase and Robinhood is structural.
Retail platforms sit at the brokerage layer, holding user relationships and fund balances, enabling them to monetize multiple profit pools simultaneously (margin funding, idle cash, subscriptions); whereas pure exchanges sell execution services, which, under liquidity and routing competition, naturally commoditize execution, with net capture being continuously squeezed. Nasdaq is a TradFi reference to this constraint.
Early on, Hyperliquid evidently tilted towards the exchange prototype. By splitting the distribution layer (Builder Codes) from the product creation layer (HIP-3), it accelerated ecosystem expansion and market coverage; however, the cost of this architecture could also push the economics outward: once a third-party frontend decides to aggregate prices and can route cross-exchange, Hyperliquid risks being pressed into a thin-margin wholesale execution track.
Nevertheless, recent actions show a deliberate shift: without relinquishing the unified execution and clearing advantages, defending the distribution rights, and expanding revenue sources to a "balance-based" profit pool.
Specifically: the protocol is no longer willing to subsidize external frontends structurally cheaper than the native UI; HIP-3 is more natively displayed; and asset-liability-style revenue sources are introduced.
USDH brings reserve rewards back to the ecosystem (50/50 split and offers USDH market fee discounts); while portfolio margin introduces financing economics through a 10% cut of borrowing interest.
Overall, Hyperliquid is converging towards a hybrid model: with the execution track as the base, overlaying distribution defense and balance-driven profit pools. This reduces the risk of being stuck in a low basis point, wholesale exchange model, while moving closer to a brokerage-style revenue structure without sacrificing the unified execution and clearing advantages.
Looking ahead to 2026, the unresolved question is: Can Hyperliquid further move towards a brokerage-style economy without undermining its "outsourcing-friendly" model? USDH is the clearest litmus test: at around a $100 million supply level, when the protocol does not control distribution, the expansion of outsourced issuance appears to be slow.
The obvious alternative path could have been at the UI level by automatically converting the approximately $4 billion of USDC holdings into a native stablecoin (similar to Binance's automatic conversion of BUSD).
If Hyperliquid wants to truly capture the prime brokerage layer's profit pool, it may also need brokerage-like behaviors: stronger control, tighter native product integration, and a clearer delineation with the ecosystem team on distribution and balance sheet competition.
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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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