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World Cup of 'Oracles': How to Interpret Next Year's Prediction Market Growth Prospects?
Original Article Title: Prediction Markets at Scale: 2026 Outlook
Original Article Author: INSIGHTS4.VC
Translation: Peggy, BlockBeats
Editor's Note: In 2025, prediction markets accelerated towards mainstream adoption: brokers, sports platforms, and crypto products all entered the space simultaneously, validating the demand. The real turning point is no longer product innovation but rather whether scalability can be achieved within a regulatory framework.
This article, using a global regulatory comparison, the divergence of on-chain and compliance paths, and the 2026 World Cup as a "system-level stress test," points out that prediction markets are entering an elimination phase focused on compliance, settlement, and distribution. The winner will be a platform that can stably operate under high loads and strong regulation.
Below is the original text:
The U.S. event contract market significantly accelerated in 2025, resonating with a "generational-level" catalyst on the horizon.
Kalshi's valuation doubled to $11 billion, and Polymarket is reportedly seeking a higher valuation level; at the same time, mass-market platforms—including DraftKings, FanDuel, and Robinhood—have all rolled out compliant prediction products ahead of the 2026 FIFA World Cup (to be held in North America). Robinhood anticipates that the event market has generated approximately $300 million in annualized revenue, becoming its fastest-growing business line, demonstrating that "opinion-based trading" is entering the financial mainstream in a scalable manner.
However, this growth is now colliding with regulatory reality. As platforms prepare for the participation peak driven by the World Cup, the prediction market is no longer just a product issue but is increasingly becoming a "regulatory design" issue. In reality, the team's development focus is shifting from merely meeting user needs to legal qualification, jurisdictional boundaries, and settlement criteria design. The importance of compliance capabilities and distribution partnerships is gradually keeping pace with liquidity; the competitive landscape is now more shaped by "who can operate at scale within the allowed framework" rather than who can list the most markets.
Interplay of Regulation
The U.S. Commodity Futures Trading Commission (CFTC) only allows a small class of event contracts tied to economic indicators, while deeming other types unacceptable gambling. In September 2023, the CFTC blocked Kalshi's attempt to launch political futures; however, a subsequent court challenge provided limited approval for contracts related to presidential elections.
At the state level, the regulatory stance is stricter towards the "prediction markets" sector. In December 2025, the Connecticut Gaming Regulator issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com, deeming their offered event contracts as unlicensed gambling; Nevada also sought judicial action to halt similar products, forcing related platforms to delist in the state.
In response, established giants like FanDuel and DraftKings restricted prediction market products to jurisdictions where "legal sports betting" is not yet established, highlighting a distribution strategy driven by regulatory boundaries rather than user demand. The core message is now crystal clear: what determines scale is not product innovation but regulatory tolerance. Contract design, settlement terms, marketing language, and geographical rollout paths are being systematically engineered to pass legal scrutiny; platforms able to operate within an accepted regulatory framework will gain a more enduring advantage. In this market, regulatory clarity itself forms a moat, with uncertainty directly constraining growth.
Weekly Prediction Market Notional Volume
Weekly Prediction Market Transactions
Global Comparable Cases
Outside the U.S., mature betting platforms and newer licensing regimes demonstrate that under gambling regulation, event-driven markets can achieve liquidity, but their economics and product boundaries are significantly constrained. The UK's Betfair Exchange proves that market depth can be formed within a gambling licensing framework, but strict consumer protection rules limit profitability. Betting in Asian markets is mostly handled by state monopolies or offshore platforms, reflecting both strong underlying demand and longstanding enforcement and fairness challenges. Latin America is moving towards regularization: Brazil opened its regulated gambling market in January 2025, attempting to transform a long-standing gray area into a taxed, regulated activity.
The overarching cross-regional trend is consistent: regulation is closing loopholes. Sweepstakes relying on "free tokens + prize mechanisms" and social casino models have been restricted or banned in multiple jurisdictions, significantly raising the compliance bar for any products operating on the gambling border. The global direction is towards stricter regulation, rather than tolerance of gray areas.
On-Chain Platform vs Compliance
Decentralized prediction markets once traded faster, with global access in exchange for compliance shortcomings. Take the example of the cryptocurrency platform Polymarket: in January 2022, it was fined $1.4 million by the Commodity Futures Trading Commission (CFTC) for operating an unregistered event-based swap and was required to enforce geographic restrictions on U.S. users. Subsequently, Polymarket made a shift: strengthened internal controls (bringing in former CFTC advisors) and, in 2025, acquired a licensed entity to enable it to relaunch in the U.S. in a testing capacity by November 2025. Its trading volume surged — reportedly reaching $3.6 billion in bets on a single election issue in 2024, growing to $26 billion in monthly trading volume by the end of 2024 — and in 2025, it introduced blue-chip investors with an estimated valuation of around $12 billion.
On-chain platforms rely on oracles to achieve rapid market creation and settlement but face a trade-off between speed and fairness: governance and oracle disputes may delay outcomes, and anonymity can raise concerns about manipulation or insider trading. Regulatory bodies also remain vigilant: even with code decentralization, organizers and liquidity providers may still become enforcement targets (as in the case of Polymarket). The challenge in 2026 is to combine the 24/7 global market and instant crypto settlement innovation with sufficient compliance without sacrificing openness.
User Behavior and Trading Trends
In 2025, prediction markets saw a simultaneous surge in both sports and non-sports events. Industry estimates indicate that the total nominal trading volume expanded by over tenfold from 2024, reaching approximately $13 billion per month by the end of 2025. The sports market became the primary "trading engine," with high-frequency events driving continuous small transactions; political and macro markets acted as "capital magnets," seeing fewer but larger transactions.
The structural differences are clearly visible: at Kalshi, sports contracts contributed the most to the cumulative trading volume, reflecting the repeated engagement of entertainment-focused users; however, more open interest was concentrated in politics and economics, indicating heavier single-position funds. At Polymarket, political markets also led in open interest, despite lower trading frequency. Conclusion: Sports maximize turnover, while non-sports concentrate risk.
This has led to two types of participants:
Sports Users: More akin to "flow traders," engaging multiple times with small amounts, primarily driven by entertainment and habit;
Political/Macro Users: More akin to "capital allocators," dealing with fewer but larger amounts, seeking informational edges, hedging, or narrative influence.
The platform is therefore facing dual optimization: it must maintain user engagement while also providing trust and fairness for a capital-driven market.
This also explains the risk concentration point: the 2025 controversy mainly revolved around non-sporting issues, including opposition from the US collegiate sports governing body to contracts involving student athletes. The platform promptly took down the relevant contracts, demonstrating that governance risks increase with fund concentration and information sensitivity, rather than with mere trading volume growth. Long-term growth depends on whether high-impact non-sporting markets can operate without crossing regulatory or reputational red lines.
2026 World Cup: System-Level Stress Test
The FIFA World Cup, to be jointly hosted by the United States, Canada, and Mexico, should be seen as a full-stack stress test for event trading and compliance gambling infrastructure. Historical analogies show:
The 1994 US World Cup primarily tested physical assets and venues; the 1996 Atlanta Olympics shifted the critical path to communication, information distribution, and emergency response. IBM's 'Info '96' centralized timing and scoring, telecom companies expanded cellular networks, Motorola deployed a large-scale radio system; the explosion at Centennial Olympic Park on July 27 of that year highlighted the importance of the system shifting from throughput to integrity and resilience under high pressure.
The stress point in 2026 will explicitly enter the digital + financial coupling layer: the event will expand to 48 teams, 104 matches, 16 cities, concentrating attention and transaction flows multiple times within about five weeks. The global betting volume for the 2022 World Cup was widely estimated to be in the hundreds of billions of dollars, with the peak window bringing extreme short-term liquidity and settlement loads.
The North American compliance track will carry a larger proportion of activity—38 US states plus the District of Columbia and Puerto Rico have legalized sports gambling to varying degrees, with more funds flowing through KYC, payment, and monitoring systems rather than offshore channels. App-based distribution will further tighten the coupling: live streaming, real-time contracts, deposits, and withdrawals are often completed within a single mobile session.
For event contracts/prediction markets, observable operational stress points include: liquidity concentration and volatility during the match window; settlement integrity (data delays, dispute resolution); product and jurisdictional design across federal/state lines; scalability of KYC/AML/responsible gambling/withdrawals under peak demand.
The same set of regulations and technology stack will face another test at the 2028 Los Angeles Olympics, so the 2026 World Cup is more like a filtering event: it may trigger regulatory intervention, platform integration, or market exit, distinguishing infrastructure built for phase peaks from sustainable, compliant, scalable platforms.
Payment and Settlement Innovation
Stablecoins are transitioning from speculative assets to operational infrastructure. Most crypto-native prediction markets facilitate deposits and settlements in USD-pegged stablecoins, and regulated platforms are also testing similar channels. In December 2025, Visa launched a pilot program in the United States, enabling banks to use Circle's USDC for on-chain settlements 24/7, building on the cross-border stablecoin experiments since 2023. In event-driven markets, stablecoins (where permitted) offer immediate access, global coverage, and settlement advantages aligned with continuous trading hours.
In practice, stablecoins function more like settlement middleware: users see them as faster on/off-ramps, while operators benefit from lower failure rates, improved liquidity management, and near-instantaneous settlements. Therefore, stablecoin policies have a second-order impact on prediction markets: restricting stablecoin channels can increase friction and delay withdrawals, while regulatory clarity favors deep integration with mainstream gambling and brokerage platforms.
However, there are also challenges. In 2025, Christine Lagarde warned of the currency stability risks of private stablecoins and reiterated support for a digital euro by central banks. The European Central Bank also highlighted in its November 2025 "Financial Stability Review" that stablecoin expansion could weaken bank funding sources and disrupt policy transmission. A more likely scenario by 2026 is a progressive integration: more gambling platforms accepting stablecoin deposits, payment institutions bridging cards to crypto, while strengthening licensing, reserve audits, and disclosures, rather than wholeheartedly endorsing a native crypto payment rail.
Macroeconomic Liquidity Context
The prosperity witnessed in 2025 needs to be viewed with skepticism: ample liquidity can amplify speculation. The Fed shifted towards ending quantitative tightening at the end of 2025, or a modest liquidity improvement in 2026, impacting risk appetite more than directionality. For prediction markets, liquidity impacts participation levels: abundant funds lead to increased trading volumes, while tightening cools speculative fervor.
However, the growth in 2025 occurred in a high-interest-rate environment, indicating that prediction markets are not primarily driven by liquidity. A more reasonable framework is to consider macro liquidity as an accelerator rather than the prime mover. Long-term factors—mainstream distribution by brokers/gambling, product simplification, and increased cultural acceptance—better explain baseline adoption. Monetary conditions influence amplitudes but do not dictate occurrences.
"Missing Element": Super App Distribution and Moat
The key question remains: Who controls the user interface for integrated trading/gambling?
Consensus is forming: Distribution is king, and the true moat lies in super-app-style user relationships.
Driving Intense Collaboration: Exchanges seeking retail users (e.g., CME Group's partnership with FanDuel/DraftKings), consumer platforms seeking differentiated content (e.g., Robinhood's partnership with Kalshi, DraftKings acquiring a small CFTC exchange).
Pattern Resembles Integrated Brokerage: Stocks, options, crypto, event contracts side by side, users need not leave the platform.
Prediction markets are exceptionally sensitive to liquidity and trust: Thin markets will fail quickly, while depth will compound. Platforms with existing users, low customer acquisition costs, ready-made KYC, and fund flows are naturally superior to standalone venues that need to build depth from scratch. Hence, it's more akin to options trading than a social network: Depth and reliability trump novelty. This is also why the "function vs. product" debate is increasingly being settled by distribution rather than technology.
Robinhood's early success supported this assessment: It introduced event trading to some active traders in 2025, rapidly gaining traction; ARK Invest estimates its recurring revenue reached $300 million by year-end. The moat is clear: Independent prediction markets (re)innovation also struggle against existing user bases. For example, FanDuel has 12M+ users and quickly established liquidity and trust in five states by integrating CME event contracts; DraftKings replicated a similar path in 38 states. In contrast, Kalshi and Polymarket spent years building depth from scratch and are now more actively seeking distribution partnerships (Robinhood, Underdog Fantasy, even UFC).
Possible outcomes: A few large aggregation platforms gain network effects and regulatory endorsement; small platforms either specialize (e.g., only focusing on crypto events) or get acquired. Meanwhile, the convergence of fintech and media into a super app is approaching: PayPal, Cash App may in the future offer prediction markets alongside payments, stocks; Apple, Amazon, ESPN have explored sports betting partnerships in 2023–25, which could evolve into broader event trading. The true "missing element" may be the moment when tech giants fully embed prediction markets into a super app — combining news, betting, and investing to form an unparalleled moat.
Before this, the user lock-in race among exchanges, betting companies, and brokers will continue. The key question for 2026 is: Will prediction markets become a feature of large financial apps or continue to exist as an independent vertical? Early indicators point to integration.
However, regulators may also remain wary of super apps seamlessly switching between investment and betting. The ultimate winner will be a platform that can convince both users and regulators — their moat will stem not only from technology and liquidity but also from compliance, trust, and experience.
Opinion Trade (Opinion Labs): Macro-focused On-Chain Challenger
Opinion Trade, launched by Opinion Labs, positions itself as a "macro-first" on-chain prediction trading platform, with its market form more resembling a dashboard for interest rates and commodities rather than entertainment-led betting products. The platform went live on the BNB Chain on October 24, 2025, and as of November 17, 2025, the total nominal trading volume has exceeded $3.1 billion, with an early-stage average daily nominal trading volume of around $132.5 million.
During the period of November 11 to 17, the platform's weekly nominal trading volume was approximately $1.5 billion, placing it at the forefront of major prediction market platforms; as of November 17, its open interest contract size reached $60.9 million, still lagging behind Kalshi and Polymarket at the time.
On the infrastructure front, Opinion Labs announced in December 2025 a partnership with Brevis to introduce a zero-knowledge proof-based verification mechanism into the settlement process, aiming to reduce the trust gap in the market outcome determination process. The company also disclosed the completion of a $5 million seed round of financing, led by YZi Labs (formerly Binance Labs), with other investors participating, providing not only financial support but also forming a strategic connection with the BNB ecosystem.
Furthermore, the platform has implemented explicit geofencing for the United States and other restricted jurisdictions, highlighting a core trade-off faced by the on-chain prediction markets in 2025–2026: how to achieve rapid global liquidity aggregation under regulatory boundary constraints.
Consumer Prediction Markets as the Distribution Channel for "ICO 2.0"
Sport.Fun (formerly Football.Fun) provides a concrete case of how consumer prediction markets have evolved into a new generation token distribution infrastructure. This emerging "ICO 2.0" model is directly embedded into consumer applications with real revenue. Sport.Fun launched on Base in August 2025, initially focusing on event trading similar to football fantasy gameplay, later expanding to NFL-related markets.
By the end of 2025, Sport.Fun disclosed that its total trading volume had exceeded $90 million, with platform revenue surpassing $10 million, demonstrating that before any public token issuance, the product had validated a clear product-market fit.
The company has completed a $2 million seed funding round led by 6th Man Ventures, with participation from Zee Prime Capital, Sfermion, and Devmons. This investor structure reflects a growing market interest in consumer-facing crypto applications that blend financial primitives with gamified engagement, moving away from merely betting on the underlying infrastructure. Importantly, this funding round took place after user engagement and monetization capabilities had been validated, disrupting the traditional sequence of the early ICO era of "selling tokens first, finding users later."
The public token sale of Sport.Fun further validates this shift.
The public sale of $FUN took place from December 16 to 18, 2025, through the Kraken Launch platform, combined with a contribution- and pedigree-based Legion distribution path. This sale attracted over 4600 participants, with a total subscription amount exceeding $10 million; the average individual wallet participation size was around $2200. The demand exceeded the $3 million soft cap by approximately 330%.
The final fundraising amount was $4.5 million, with a token price of $0.06, corresponding to a Fully Diluted Valuation (FDV) of $60 million; after the exercise of the greenshoe option, a total of 75 million tokens were sold.
The tokenomics design aims to strike a balance between liquidity and post-listing stability.
According to the arrangement, 50% of the tokens will unlock at the Token Generation Event (TGE) in January 2026, with the rest released linearly over 6 months. This structure is notably different from the common "immediate full unlock" seen in the early ICO period, reflecting a learning and correction from past experiences of volatility-driven collapses in price. Functionally, this token issuance appears less like a purely speculative fundraising event and more like a natural extension of an existing consumer market—enabling users already actively trading on the platform to essentially "invest" in the product they are using.
Conclusion
By the end of 2025, the predicted market has transitioned from a marginalized experiment to a trusted, consumer-oriented market category. Its growth is fueled by mainstream channel distribution, product simplification, and clear user demand. The current key constraint is no longer "adoption" but rather how to design under regulatory frameworks: legal categorization, settlement finality, and cross-jurisdictional compliance determine who can achieve scale.
The FIFA World Cup should not be simply understood as a narrative of growth, but rather as a system-level stress test under peak load—an all-encompassing examination of liquidity, operational capacity, and regulatory resilience. Those platforms that are able to pass the test without triggering enforcement risks or suffering reputational harm will define the next phase of industry consolidation; those that fail to do so will accelerate the industry toward higher standards, stronger regulation, and a smaller number of but larger winners.
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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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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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