As markets convulse, regulators tighten policy and close cross-border loopholes. On February 6, 2026, the People’s Bank of China, the National Development and Reform Commission, the National Financial Regulatory Administration, the China Securities Regulatory Commission and four other agencies jointly issued the Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies and Other Activities, amid sharp volatility in global crypto markets and a resurgence of speculation. The notice lays out a coordinated push to prevent financial risk and preserve market order.

On the eve of the policy release, Bitcoin had fallen below $60,000. More than 200,000 investors were liquidated within hours, and 6.6 billion yuan evaporated. The latest “crypto winter” again underscored the high risks of virtual currency markets and the need for regulation.

Core policy highlights: six dimensions to strengthen the regulatory firewall. Building on the core prohibitions in the 2021 Circular No. 237 issued by ten agencies, the notice adds a number of hard constraints aimed at new market developments, creating an end-to-end and look-through regulatory system.

It reaffirms the illegal status of virtual currencies and blocks offshore service channels. The notice makes clear that virtual currencies such as Bitcoin, Ether and Tether do not have the status of legal tender or legal compensation, and that related business activities constitute illegal financial activities.

China strictly bans the exchange of fiat currency for virtual currency, trading between virtual currencies, token issuance financing and related businesses within its borders. For the first time, it also states that “overseas entities and individuals may not illegally provide virtual currency-related services to domestic entities in any form,” cutting off cross-border service channels.

It sets the first red line for stablecoin issuance and defends monetary sovereignty. Targeting the speculative risks that have emerged around stablecoins in recent years, the notice introduces a dedicated rule for the first time: without approval from relevant authorities in accordance with laws and regulations, no entity or individual, whether inside or outside China, may issue an offshore stablecoin pegged to the renminbi.

Regulators said stablecoins, in circulation, effectively perform some functions of legal tender. The measure is intended to prevent offshore stablecoins from disrupting China’s monetary system and to safeguard national financial sovereignty.

RWA tokenization is brought under regulation, with legal boundaries defined. In a major policy shift, the notice for the first time defines real-world asset, or RWA, tokenization as the use of cryptographic technology to convert asset ownership and income rights into tokens for trading. It also makes clear that any unapproved domestic activity of this kind, as well as related intermediary and technical services, is suspected of constituting illegal financial activity.

At the same time, it leaves room for compliant activity, allowing related businesses that have obtained approval from the competent authorities and operate through designated financial infrastructure. The approach seeks to ban disorderly activity while preserving a lawful path.

Cross-border issuance will be tightly regulated to prevent companies from “going offshore” to evade oversight. In response to the cross-border transmission risks of peer-to-peer virtual currency trading, the notice adds a clear requirement: without approval from relevant authorities, domestic entities and offshore entities they control may not issue virtual currencies overseas.

For domestic entities conducting RWA tokenization business overseas, the notice establishes the principle of “same business, same risk, same rules.” It distinguishes between categories such as external debt structures and asset securitization-like arrangements, and clarifies the regulatory responsibilities of the National Development and Reform Commission, the CSRC, the State Administration of Foreign Exchange and other agencies. Such activities may not proceed without approval and filing.

The full chain of crypto mining activity will be tightly controlled, with stronger source-level oversight. On the rectification of virtual currency mining, the notice sets out clear and binding requirements: the National Development and Reform Commission, together with relevant agencies, will strictly control crypto mining activities, comprehensively review, investigate and shut down existing crypto mining projects, strictly ban new mining projects, and prohibit mining rig manufacturers from providing mining rig sales and other services inside China.

Provincial governments will bear overall responsibility for mining rectification within their jurisdictions and must strictly implement the relevant policy requirements, curbing crypto mining-related risks across production and operation.

Multi-agency coordination will build an all-scenario regulatory network. The notice strengthens cross-department coordination and makes clear that financial institutions may not provide account opening, fund clearing or other services for virtual currencies or noncompliant RWA businesses;

Internet companies are strictly barred from providing online business venues, marketing and promotion or other support. Market regulators will add terms such as “virtual currency” and “RWA” to the prohibited and restricted list for business scopes and crack down on illegal advertising. Cyberspace, telecom and public security authorities will jointly shut down noncompliant websites, apps and public accounts, creating a coordinated enforcement mechanism.

Comparison with old policy: an upgrade from “banning trading” to “comprehensive prevention and control.” Compared with the 2021 Circular No. 237 issued by ten agencies, the new notice contains three major upgrades:

First, the regulatory scope expands from virtual currency trading and speculation to new areas such as RWA tokenization and cross-border issuance, covering risks more comprehensively;

Second, regulatory tools extend from domestic controls to cross-border look-through supervision, closing loopholes for offshore regulatory arbitrage. Third, the regulatory bodies expand beyond financial regulators to include market regulation, cyberspace and industry and information technology authorities, building an end-to-end governance system.

Experts said the upgrade reflects regulators’ precise grasp of evolving risks in digital assets and is a concrete expression of the modernization of financial governance capacity.

Expert interpretation: balancing risk prevention with support for innovation. Zeng Gang, deputy director of the National Institution for Finance and Development, said the notice is timely, cracking down hard on illegal financial activities carried out in the name of virtual currencies and RWA while leaving room for compliant innovation and avoiding a one-size-fits-all approach. Yu Xun, a professor at East China University of Political Science and Law, emphasized that virtual currencies carry inherent risks in areas such as anti-money laundering and cross-border capital transfers. The policy uses blockchain traceability, big data monitoring and other technical tools to enable full-chain oversight, while strengthening international coordination, which will help curb regulatory arbitrage.

Regulatory officials warned that virtual currency investment and trading activities carry significant legal risks. Related civil acts may be deemed invalid for violating public order and good morals, and investors must bear any losses themselves.

Next, the agencies will step up policy communication and risk warnings, maintain a tough stance against related illegal and criminal activities, and work to safeguard economic and financial order as well as the property security of the public.