Digital Assets and Tokenisation

Digital assets and tokenisation: the short answer for China

Digital assets and tokenisation sit on a sharp regulatory line between mainland China and Hong Kong. On the mainland, virtual currency business is illegal financial activity, stablecoin issuance and related business are prohibited, and tokenisation of real-world assets (RWA) is prohibited onshore unless approved and conducted on specified financial infrastructure. Offshore, mainland assets may support tokens issued in markets such as Hong Kong, but only after approval or filing with the competent mainland regulator. Hong Kong, meanwhile, licenses virtual asset trading platforms, stablecoin issuers and tokenised products within its securities and banking regimes.

The current mainland baseline is the Notice on Further Preventing and Disposing of Risks Relating to Virtual Currencies (Yin Fa [2026] No. 42), issued on 6 February 2026 by the People's Bank of China (PBOC) with the NDRC, MIIT, the Ministry of Public Security, SAMR, NFRA, CSRC and SAFE. It repealed the 2021 notice, restated the crypto prohibition and extended it to stablecoins and RWA. On the same day the CSRC issued a guideline creating a filing route for offshore issuance of asset-backed security tokens based on domestic assets.

At the same time, the state is building its own digital money and data economy. The digital RMB is operated through banks, and from 1 January 2026 bank-held digital RMB wallet balances became interest-bearing deposit liabilities. Enterprises have been able to recognise data resources in their accounts since January 2024, and data exchanges in Shanghai, Shenzhen, Beijing and elsewhere list and trade data products. "Digital assets" in China therefore covers several very different things, each with its own rules.

This hub explains how the pieces fit for foreign financial institutions, asset owners, technology companies, founders and investors. It is general information on the Chinese and Hong Kong environment from a cross-border perspective, not advice on a particular structure.

The mainland rules after the February 2026 notice

The 2026 notice keeps the core prohibition on virtual currency business, including exchange between fiat and virtual currencies, token issuance financing and intermediation, and widens it. The table summarises its main points. The full text is published on the CSRC website.

Holding virtual currency as an individual is not itself listed as an offence, but the mainland legal system will not support the business. Courts have generally treated virtual currency trading, mining services and related investment contracts as void, while in some cases recognising property attributes for criminal law or asset return purposes. Criminal enforcement focuses on illegal fund-raising, fraud, illegal business operation, money laundering and cross-border gambling.

Blockchain technology itself remains lawful and promoted. Enterprise blockchain for supply chain finance, trade documents and government services is common, and blockchain information services file with the CAC. Mainland digital collectibles platforms avoid financial features such as secondary trading and fractionalisation. The line is functional: the same software becomes prohibited once it carries a token that users can buy, sell or redeem. See Web3 and virtual assets.

RWA tokenisation of mainland assets

For asset owners, the most significant development of 2026 is that tokenisation backed by mainland assets has a defined regulatory path. The 2026 notice allocates offshore RWA based on domestic rights to the NDRC, CSRC and SAFE according to their remits: debt-type structures to foreign debt procedures, asset-backed and equity-type structures mainly to the CSRC, and other forms to the CSRC with other departments.

Under the CSRC's Regulatory Guideline on the Offshore Issuance of Asset-Backed Security Tokens Based on Domestic Assets, the domestic entity that actually controls the underlying assets must file with the CSRC before the offshore issuance, submitting a filing report and complete offshore documents. The CSRC may request supplements, completes the filing and publishes filing information, or refuses it. Post-issuance, the filer reports completion, major risks and other major matters.

The guideline lists circumstances in which issuance may not proceed, including where capital market financing is prohibited by law, where the issuance may endanger national security, where the filer or its controllers have committed specified economic crimes in the past three years or are under investigation, where the assets are subject to material ownership disputes or cannot lawfully be transferred, and where they fall within the negative list for domestic asset securitisation.

A typical project path

1. Asset selection: stable, verifiable cash flows; clean title; transferable; outside the securitisation negative list.
2. Classification: asset-backed, debt-type, equity-type or other, which fixes the lead regulator.
3. Structure: offshore issuing vehicle, holding chain and legal link to the mainland assets.
4. Mainland steps: CSRC filing or other approval, with outbound investment, foreign debt, SAFE and data export procedures as relevant.
5. Offshore steps: licensed intermediaries, offering documents, custody and platform arrangements.
6. Technology: smart contracts with transfer restrictions, whitelisting and freezing functions; independent audit.
7. Issuance and reporting: eligible investors only, followed by reports to the CSRC and host regulators.

Worked example

A mainland logistics group owns modern warehouses leased to e-commerce and manufacturing tenants. It wants to raise funds from Hong Kong professional investors against rental receivables through a token issued by a Hong Kong vehicle. The group first confirms clean title, that the receivables can be transferred and that the assets are outside the securitisation negative list.

Because the token is asset-backed, it files with the CSRC before issuance, while planning SAFE steps for the remittance of rents and an outbound investment filing for the Hong Kong vehicle. Tenant data is aggregated before any on-chain reporting so that no personal information leaves the mainland. The offering is made through SFC-licensed intermediaries, and the documents explain what happens to distributions if a mainland step is later withdrawn.

Our RWA tokenisation page explains each step, and the comparison with conventional routes is covered under securitisation, ABS and ABN and offshore bonds.

Hong Kong as the offshore venue for digital assets and tokenisation

Hong Kong is the most common offshore venue for mainland-linked digital assets and tokenisation, and its framework now has three main pillars. Virtual asset trading platforms are licensed by the Securities and Futures Commission, which publishes lists of licensed and applicant platforms; twelve were operating as at March 2026. Tokenised securities are treated as securities, so offering, dealing and advising require SFC licensing. And fiat-referenced stablecoin issuers are licensed by the HKMA.

The Stablecoins Ordinance (Cap. 656) came into operation on 1 August 2025, and the HKMA granted the first issuer licences on 10 April 2026. Issuers need minimum paid-up capital of HK$25 million, reserve assets at least equal to the par value of coins in circulation, segregated and held in high-quality liquid assets, and redemption at par, generally within one business day. Offers to the public are restricted to licensed stablecoins and permitted offerors. Details are on the HKMA website.

Tokenised products are growing. The SFC reported 13 tokenised retail products by 31 March 2026, and its joint work with the HKMA on tokenised deposits moved to a pilot for real-value transactions in November 2025. The SFC looks through the token to the underlying instrument and expects intermediaries to manage ownership records, smart contract security and custody risks. Many mainland-linked issues are offered to professional investors only.

Hong Kong's openness does not change the mainland position. Issuing an RMB-pegged stablecoin offshore without mainland approval is prohibited, and Hong Kong platforms must keep mainland users out. See stablecoins and Hong Kong virtual asset licensing and our Greater Bay Area hub.

Comparing the main markets

Groups operating across markets need to know where each activity may lawfully be carried on, and for whom. The table gives a simplified comparison.

The comparison shows why most China-linked projects in digital assets and tokenisation are designed around Hong Kong rather than the mainland, and why the mainland steps still sit on the critical path. A project that works in Hong Kong, Singapore or the EU on its own terms may still be unlawful if it touches mainland users, mainland assets without a filing, or mainland payment channels.

Risks for founders, institutions and investors

The mainland rules reach well beyond the mainland. Offshore businesses involved in digital assets and tokenisation should test their structures against the following points.

• Users. Geo-blocking, KYC and marketing controls that exclude mainland users must be real and auditable.
• People. Mainland-resident founders, engineers, community managers and support teams of offshore projects may face personal exposure where the project serves mainland users. Role definitions should reflect the difference between protocol engineering and onboarding or promotion.
• Capital. Outbound investment by mainland entities engages NDRC, MOFCOM and SAFE procedures, and domestic entities and offshore entities they control may not issue virtual currencies offshore without approval; see ODI approvals.
• Banking. Mainland financial institutions and payment companies cannot serve the business; offshore subsidiaries of mainland institutions must act prudently and report.
• Anti-money laundering. The revised Anti-Money Laundering Law, in force since 1 January 2025, strengthens due diligence and beneficial ownership duties, and authorities watch over-the-counter channels used to move funds across the border; see anti-money laundering.
• Disputes. Mainland courts may treat contracts as void, and offshore awards may face public policy objections, so seat, governing law and custody location matter; see financial disputes.

For foreign banks and asset managers, the questions are slightly different. Hong Kong subsidiaries may participate in tokenised deposits, stablecoin distribution or tokenised fund pilots, while their mainland affiliates must stay outside prohibited activity. Information barriers, product governance and client onboarding must keep the two apart, and group policies should state which entity may do what.

Documenting a tokenisation

Token documents need to do more than describe the technology. Offering materials should explain the legal nature of the holder's rights, the chain of title back to the underlying assets, the mainland filings or approvals obtained and their conditions, the cash flow path, and the consequences if an approval is withdrawn or a regulator intervenes. Smart contract terms and legal terms must match: transfer restrictions, whitelisting, freezing powers and redemption mechanics should be described in the documents and implemented in code.

Service agreements matter too. The issuer will rely on a token administrator, custodian, platform operator, smart contract auditor and possibly a stablecoin or tokenised deposit provider for settlement. Each agreement should allocate responsibility for outages, key compromise, errors in code and regulatory changes, and should give the issuer audit and information rights. Where any service provider is a mainland entity or a subsidiary of a mainland financial institution, check that its role is permitted under the 2026 notice.

Common mistakes

• Assuming a Hong Kong licence permits marketing to mainland residents.
• Treating a token as a technology feature when its function makes it a financial product.
• Starting offshore documentation before classifying the token and confirming the mainland path.
• Exporting asset data for on-chain reporting without a data transfer analysis.
• Registering mainland entities with business scopes or names referring to stablecoins or RWA.

Data assets, the digital RMB and what to watch

Not every digital asset is a token. Data has been promoted as a factor of production, and since January 2024 enterprises have been able to recognise qualifying data resources as intangible assets or inventory. Data exchanges list data products, and some lenders accept data assets in financing structures. The legal questions concern lawful collection, licensing rights, personal information and important data, rather than securities law; see data assets and data trading.

The digital RMB is the state's own form of digital money. It is issued by the PBOC and distributed through commercial banks, which hold wallets for individuals and businesses. The change from 1 January 2026, under which bank-held wallet balances became interest-bearing deposit liabilities, brings the digital RMB closer to ordinary bank deposits in legal and commercial terms. For foreign companies in China, acceptance of digital RMB payments is a payments and treasury question handled through their banks; cross-border use in trade settlement remains at a pilot stage and should be confirmed case by case.

Several developments are worth watching into 2027 for digital assets and tokenisation linked to China:

• the first CSRC filings under the asset-backed security token guideline, which will show what the regulator accepts in practice;
• any approved onshore tokenisation on specified financial infrastructure;
• additional HKMA stablecoin licences and the scope of permitted offerings;
• the draft Financial Law, submitted for first reading in June 2026, and its treatment of illegal financial activity;
• cross-border use of the digital RMB and tokenised deposits in trade settlement.

Our broader fintech regulation page explains the licensing system within which all of these sit.

How TRW & Co helps

TRW & Co's Shenzhen representative office helps asset owners, financial institutions, technology companies and investors structure digital assets and tokenisation projects across the mainland-Hong Kong line. We design offshore structures and token terms, coordinate Hong Kong licensing and offering workstreams, advise on non-PRC regimes such as MiCA and US rules where our lawyers are qualified, and provide information on the mainland regulatory environment. We manage the overall timetable and documents. Where PRC legal advice, CSRC filings, foreign debt or SAFE procedures, or representation before Chinese authorities are needed, we work with licensed PRC law firms and coordinate the combined team. Contact us to discuss your project.