China introduces stricter rules for offshore tokenised assets amid cautious fintech push

On February 6, 2025, China’s financial authorities for the first time set out a constrained legal route for turning domestic assets into tokenised products offered overseas, while reiterating that mainland crypto businesses remain prohibited. According to Caixin, a joint circular issued by the People’s Bank of China and seven other regulators , known in market shorthand as Document No. 42 , draws a firm line between outlawed onshore token markets and a tightly controlled framework for offshore fundraising that uses distributed ledger techniques to represent real‑world assets.

The China Securities Regulatory Commission followed with operational guidance aimed specifically at tokenised asset‑backed securities issued abroad but collateralised by Chinese assets, signalling regulators intend to move from principle to practice. Industry sources cited by Caixin expect additional rule‑making for other token categories. Regulators have emphasised that publishing rules does not amount to encouragement; application criteria are demanding and approvals will be closely scrutinised.

The new regime treats tokenisation as a technological method rather than a distinct asset class and applies a “look‑through” test that focuses on the economic reality of deals rather than on whether a blockchain is used. Most transactions that convert ownership or income rights into tradable digital units will be governed under existing frameworks for offshore debt, equity or securitisation, with different agencies supervising transactions depending on their economic character and the State Administration of Foreign Exchange exercising cross‑cutting control. Caixin describes regulators dividing tokenised RWAs into external‑debt, equity‑like, securitisation‑like and residual categories, each subject to traditional financial controls.

Policy architects say the intent is to clamp down on scams and unauthorised fundraising while permitting strictly regulated fintech innovation. Analysts quoted by the South China Morning Post argue the onshore prohibition was necessary to protect monetary sovereignty and head off capital flight, even as Hong Kong and other regional markets are cultivated as venues for compliant token issuance. Panewslab notes that Document No. 42 strengthened the legal basis for oversight by clarifying definitions and referencing higher‑level laws.

Market reaction was tentative but positive. Shares of some listed firms with tokenisation ties jumped after the announcement, and major banks and technology groups , including China International Capital Corp., Ant Group and JD.com , began reassessing offshore projects. Caixin reports that a number of institutions revived proposals for tokenised offerings, albeit with a sharper focus on meeting the new compliance bar.

Global on‑chain RWA volumes remain concentrated in financial and commodity instruments. Industry data cited in the Caixin analysis show that by February 2025 more than 90% of roughly $23.87 billion of on‑chain RWA exposure was tied to financial or commodity assets, with U.S. Treasuries alone exceeding 41% of the total. Physical assets such as real estate account for a modest share because confirming cash flows and title on‑chain is more complex. Market commentators differ over which domestic assets are best suited for offshore tokenisation; some point to equity tokenisation for unlisted issuers as the most promising avenue, especially given a decline in China’s offshore equity fundraising from about $140 billion in 2021 to roughly $60 billion in 2025.

Regulators have made clear that allowing tokenised offshore issuance does not permit mainland entities to bypass domestic rules. Issuers seeking to package Chinese assets for foreign token markets will face multiple approvals, strict documentation and an explicit “negative list” barring problematic asset types and issuers with adverse records. Early pilots, according to Caixin, were costly and raised limited sums, with annualised yields on some projects reported above 15%, underscoring investor scepticism about whether tokenisation alone can create demand.

The supervisory tilt favours established offshore centres. Hong Kong and Singapore are highlighted as preferred venues because of their developed regulatory ecosystems; Hong Kong in particular has moved quickly to expand tokenised bond programmes and broaden investor access. By contrast, U.S. exchanges are seen as imposing higher entry barriers for Chinese issuers. The Block and China Daily both report that authorities have also tightened oversight of yuan‑linked offshore stablecoins and reiterated the illegality of crypto trading and certain token issuance activities on the mainland.

Not all observers interpret the shift as liberalisation. Some trade and industry bulletins such as FinanceFeeds framed the measures as classifying RWA tokenisation activities as illegal under existing financial laws, and several regulators and industry associations have issued risk warnings emphasising that unauthorised digital‑asset fundraising and securities issuance will be treated as illicit. That tension , between a carefully permitted offshore channel and broad domestic prohibitions , encapsulates Beijing’s wider aim: to allow controlled experimentation with tokenised structures for cross‑border financing while insulating the domestic financial system from contagion and fraud.

For market participants the implications are practical. Successful tokenised offerings will hinge on transparent cash flows, robust asset documentation and credible investor demand rather than on technological novelty. As Caixin and other outlets note, the policy replaces uncertainty with a compliance pathway, but it is narrow, bureaucratically intensive and conditioned on tight oversight. If issuers can satisfy regulators and prove the economic substance of tokenised claims, a modest, supervised market for offshore tokenised Chinese assets may emerge; if not, the rules will predominantly serve as a gatekeeper keeping speculative and illicit activity at bay.