The Loophole is Closed
The People’s Bank of China (PBOC), backed by seven other top regulatory bodies, issued a joint directive Friday explicitly banning domestic companies from issuing cryptocurrencies through offshore entities. The move effectively dismantles the legal gray zone that allowed Chinese tech firms to launch digital assets from jurisdictions like Singapore or Hong Kong while maintaining mainland operations.
Markets reacted immediately. XRP slid 8% to $1.46, while meme tokens like SHIB and BONK posted losses exceeding 3%. The directive, titled “Notice on Further Preventing and Addressing Risks Related to Virtual Assets,” signals a coordinated shift from passive restrictions to active cross-border enforcement.
Stablecoins and RWAs: The New Targets
The regulatory dragnet has expanded beyond simple trading bans. The notice explicitly prohibits the issuance of yuan-pegged stablecoins without central bank approval, citing threats to “monetary sovereignty.”
Stablecoins linked to fiat currencies perform some functions of fiat currencies during circulation and usage in a disguised way.
Real-World Asset (RWA) tokenization, a sector previously viewed by some as a compliant innovation, was swept into the illegal financial activity bucket. Under the new rules, onshore entities are barred from engaging in RWA tokenization overseas, either directly or through debt instruments.
Institutional Context
This is not a rehash of 2021. The inclusion of the Ministry of Public Security and the Supreme People’s Procuratorate in the joint notice indicates criminal liability is now on the table for offshore issuers. The PBOC’s specific targeting of “foreign platforms providing services” suggests a firewall hardening that will force global exchanges to sever remaining ties with mainland liquidity.
Domestic firms waiting for a Hong Kong pivot just lost their exit strategy.
