Eight Chinese regulatory authorities jointly published tightened crypto regulations on February 6, 2026. The People's Bank of China (PBOC) and the China Securities Regulatory Commission (CSRC), among others, backed the announcement.
The "Notice on Further Preventing and Handling Risks Related to Virtual Currencies" (Yinfa [2026] No. 42) targets two areas. For the first time, it explicitly prohibits the issuance of yuan-pegged stablecoins and the tokenization of real-world assets (RWAs). Beijing is significantly expanding its existing crypto ban. Other signatories include the Ministry of Public Security and the State Administration of Foreign Exchange. This new regulation replaces its 2021 predecessor and takes effect immediately. In addition, the authorities reaffirm that all business activities involving virtual currencies constitute illegal financial activities.
Subscribe to our newsletter
The best articles of the week, directly delivered into your mailbox.
Stablecoins and RWA in the crosshairs
The ban on yuan-pegged stablecoins applies to both domestic and foreign entities. Specifically, no one may issue renminbi stablecoins abroad without regulatory approval. Overseas subsidiaries of Chinese companies also fall under the ban. Foreign providers are likewise prohibited from offering crypto-related or RWA tokenization services to Chinese citizens.
The PBOC had already warned about stablecoins in November 2025. "Stablecoins currently cannot effectively meet customer identification and anti-money laundering requirements. As a result, these currencies should not and cannot be used in market circulation." Now, the new notice converts this position into binding law.
On RWA tokenization, regulators are breaking new ground. For the first time, they explicitly ban the tokenization of stocks, bonds, or real estate without regulatory approval. This positions China against one of the fastest-growing sectors in the crypto industry.
Fraud case as catalyst
A specific trigger for the crackdown was the collapse of the Xinkangjia DGCX platform in June 2025. Around 2 million investors lost a total of 13 billion yuan (USD 1.9 billion). Fraudsters used the stablecoin USDT (Tether) for deposits and withdrawals, promising their victims daily returns of 2 percent. By February 2026, authorities had arrested 37 team leaders and frozen over 120 million yuan.
"Speculative behavior related to virtual currencies and the tokenization of real-world assets occurs frequently, presenting new challenges and situations for risk prevention and control." - Joint statement by the eight Chinese regulatory authorities
The DGCX case demonstrated how stablecoins can serve as tools for capital flight and fraud. As a result, the PBOC views this as a direct threat to financial stability. Accordingly, financial institutions must now ensure they do not provide accounts, transactions, or custody services for virtual currency trading. Meanwhile, internet companies must block platforms used for such activities.
Enforcement remains China's biggest challenge
China's crypto bans have a long history. Beijing first banned Bitcoin back in 2013. ICOs followed in 2017. In June 2021, authorities prohibited crypto mining. By September of the same year, all crypto business activities were outlawed. Major exchanges such as Binance and Huobi subsequently stopped registering Chinese users.
Yet enforcement remains patchy. Despite the 2021 mining ban, China rose to become the third-largest Bitcoin mining nation by late 2025. Its global market share grew from 13.75 percent in Q1 2025 to 14.06 percent in Q4. Cheap energy in the provinces of Xinjiang and Sichuan, along with overproduction of solar and wind power, drives this growth. In January 2026, a raid in Xinjiang shut down 1.3 GW of mining capacity and took 400,000 rigs offline. Still, whether this reverses the trend remains questionable.
The digital yuan as a state-run alternative
In parallel with tightening crypto regulation, Beijing is pushing adoption of the digital yuan (E-CNY). A new regulatory framework took effect on January 1, 2026, reclassifying the E-CNY from "digital cash" to "digital deposit money." Since then, commercial banks have been paying 0.05 percent annual interest on verified E-CNY wallet balances. This makes China's CBDC the first in the world to offer interest payments.
Adoption figures are remarkable. By the end of November 2025, the E-CNY recorded 3.48 billion cumulative transactions worth 16.7 trillion yuan (approximately USD 2.4 trillion). Through the cross-border mBridge network, 4,047 transactions worth 387 billion yuan (USD 54 billion) were processed. Of these, 95 percent were denominated in E-CNY.
Beijing's strategy is clear. China is eliminating private crypto alternatives while expanding its state-controlled digital currency. In January 2026, the global stablecoin market processed USD 10 trillion in transactions, a historic record. Beijing wants to prevent yuan stablecoins from exploiting this ecosystem to circumvent capital controls. Instead, the E-CNY is meant to define the digital future of Chinese payments.
Tighter controls in practice
The new notice goes beyond symbolic bans. Company registrations may no longer contain crypto-related terms. Additionally, authorities are tightening oversight of mining activities. And financial institutions bear the responsibility to identify and report suspicious transactions.
Whether this latest crackdown proves more effective than previous bans depends on the actual capacity of the authorities. China's crypto history follows a recurring pattern. Bans are followed by new circumvention strategies. The DGCX scandal and the persistence of the mining sector demonstrate that regulatory pressure alone does not eliminate demand for crypto services.
