China has recently officially defined Real-World Asset tokenization and banned it for the private sector – it has created an exception for it on “state approved infrastructure.”
Faisal Monai, CEO of droppRWA, posits that Beijing is clearly interested in RWA tokenization, and wants to execute it at the state level. “What most coverage is missing is that China didn’t actually ban tokenization. They banned private tokenization.
The notice explicitly carves out an exception for activity conducted on state approved financial infrastructure. That’s a very deliberate distinction. Beijing is saying what a lot of governments are thinking but haven’t said publicly yet, real world assets on public, permissionless chains is a non-starter for sovereign economies.
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The only version of this that works is state controlled, sovereign-native infrastructure. The interesting comparison is Saudi Arabia, which reached the same conclusion from the opposite direction. Instead of locking down first and figuring out the infrastructure later, the Kingdom went straight to building it, integrating tokenization directly into the national property registry and executing live sovereign transactions.
And critically, they’re inviting the private sector to build on top of that infrastructure, not shutting them out. The state owns the rails, but technology companies, banks, FinTech and PropTech firms are welcome to build services on them.
China is closing the door to private participation. Saudi Arabia is holding it open on sovereign terms. Singapore, Hong Kong, the UAE, are all advancing regulated frameworks and supervised pilots. But the jurisdictions that will actually define this market aren’t the ones testing in sandboxes.
They’re the ones putting national infrastructure into production. That’s where this is heading and China’s notice just made it harder to argue otherwise. The notice provides China’s first explicit regulatory definition of RWA tokenization.
It describes it as the use of cryptographic technology, distributed ledger technology or similar technologies to convert ownership rights, income rights, or other asset-related rights into tokens or token-like rights, equity, or debt instruments for issuance and trading.
Unlicensed or unapproved RWA tokenization activities conducted within mainland China—including issuance, trading, intermediary services, and related technical and IT support—are classified as illegal financial activities. This includes risks like unauthorized securities offerings, illegal fundraising, or operating securities and futures businesses without approval.
In practice, this effectively prohibits private sector players from engaging in decentralized or unlicensed RWA tokenization onshore, aligning with China’s long-standing strict stance against unregulated crypto-like activities. The policy is not a blanket ban on all tokenization. It explicitly allows exceptions when activities are: Approved by competent authorities.
Conducted through designated (regulated) financial infrastructure. This carves out space for state-supervised or licensed implementations, often interpreted as separating “compliant” RWA within traditional finance rails from decentralized/private crypto-style versions.
Onshore entities face strict vetting and compliance requirements for offshore issuance of tokenized assets backed by Chinese onshore assets. Unapproved offshore RMB-linked stablecoins are also banned, and foreign entities are prohibited from illegally providing RWA services to domestic parties.
This move extends China’s 2021 crypto ban which targeted virtual currencies, trading, and mining to explicitly cover tokenized real-world assets, while distinguishing RWA from pure cryptocurrencies which remain fully prohibited.
Some analysts view it as a “milestone” that brings RWA into a clearer regulatory framework rather than leaving it in a gray area—potentially enabling controlled innovation in tokenized securities or asset-backed structures, especially offshore with approval.
Others see it as a tightening clampdown to prevent private-sector risks to financial stability and capital controls. Stock markets reacted positively in some cases, with RWA-related shares rising on hopes of regulated opportunities, though enforcement remains strict for unlicensed private initiatives.
China has now officially defined RWA tokenization and prohibited it for unlicensed and private sector activities onshore, while allowing tightly controlled, approved versions—consistent with Beijing’s preference for centralized oversight over decentralized finance.