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TRUMP-Attracted Crypto Outsiders, Are They Still Making Money?
Let's rewind back to January 17, just two days before the inauguration of the new US pro-crypto president.
On this day, out of the blue, Trump suddenly announced the launch of a crypto MEME coin called $TRUMP on his social platform, Truth Social, catching everyone off guard.
In a matter of seconds, $TRUMP ignited the start of the 2025 crypto market, becoming the most bullish celebrity coin in history. Within 24 hours of its launch, it was swiftly listed on top exchanges like Coinbase and Binance, with a trading volume surpassing $10 billion, more than three times that of Bitcoin's 24-hour volume.
Apart from conspiracy theorists, the early birds of the 24/7 meme coin trading world were the first to make money on $TRUMP. Even amidst suspicions like "Trump's official account must have been hacked," a group led by 0xSun leveraged their years of on-chain data monitoring expertise to act swiftly and buy early. Around the 10th minute of $TRUMP's launch, 0xSun started buying, investing $600,000 in half an hour at an average cost of just $0.6, yielding over $27.5 million in profits, a legendary feat.
However, the issue lies in the fact that the MEME coin market is a typical zero-sum game; devoid of technological innovation, fundamentals, or value creation, it solely depends on timing the buy-ins, so not everyone can be as lucky as 0xSun. As the hype faded and Trump's wife coin issuance led to an indirect increase in the supply of $TRUMP, the coin's price plummeted from a peak of $72 to currently hover around $17.
Early statistics indicate a clear bell-curve distribution of profitable addresses, with still 560,000 addresses at a loss and only 300,000 addresses in profit.
Data Source: Dune
PHD Student Koha Also Falls Victim to Holding the Bag
The market isn't always kind to everyone. Koha is a case in point; he is one of those 560,000 individuals trapped in losses.
KOHA is a Canadian engineering Ph.D. candidate who occasionally dabbles in U.S. stock investments. In 2024, he took a gamble on Trump winning the presidency and bought shares of DJT stock ahead of time, ultimately making a small profit. This success instilled confidence in Trump's business model in him, leading him to mistakenly believe that $TRUMP coin would have long-term value similar to DJT stock.
However, the cryptocurrency market moves much faster than the stock market.
At the time of $TRUMP coin's release, it was Saturday morning in Beijing time, but late Friday night in the U.S. and Canada time zones. Like many locals who were resting at that time, KOHA did not pay immediate attention to this event. By the time he learned of the $TRUMP release, it was already the next day for KOHA.
Due to Trump's frequent unfriendly policy adjustments towards the international student community, coupled with the close relationship between Canada and the U.S., lucky KOHA found himself in an environment highly attentive to Trump's actions. During the next day, KOHA learned about Trump's coin issuance in the international student group chat, with $TRUMP already soaring from the initial price all the way to $28.
He immediately took action, attempting to purchase $TRUMP through the Moonshot platform, but due to identity verification, uploading a driver's license for KYC procedures, and learning how to make the purchase, some time was wasted. By the time he finally managed to buy, the price had risen to $30. Nevertheless, he hesitated very little and decided to enter the market.
"This four-year term has just begun, and Trump is very authoritarian in this administration. The U.S. president can only serve two terms, so everyone recognizes that during the second term, it's about making money, doing business. Everyone in the world wants to do business with him. In the future, whoever wants to do business with him, $TRUMP is a pathway and a threshold," KOHA's logic was straightforward.
In KOHA's view, the more people there are who want to establish a connection with Trump through this method, the higher the price of Trumpcoin will be. "This scheme is obviously much easier to manipulate than DJT, with no need to report to the SEC upon sale. The total supply is 1 billion, with only 200 million in circulation, and 80% of the tokens are still held in their own hands. I immediately sold all DJT and bought $TRUMP coins."
KOHA is not the only investor who believes that Trump's business model can be replicated in the crypto market. In fact, many people see Trump's $TRUMP issuance as part of his financial strategy.
“Trump cannot fit in, cannot blend in, and he cannot even attempt to merge. The discord between him and his daughter Ivanka is actually a discord between two factions of financial ideology, a discord between capital. Even blood ties cannot merge.” KOHA analyzed, in his view, “the traditional financial market is controlled by the Jewish capital of Wall Street and the Democratic Party,” Trump has never been able to integrate into this system, and his only way out is to go against the trend, leveraging the decentralized nature of cryptocurrency to establish his own financial order.
KOHA's understanding of the crypto industry is as the “unexpected beneficiary of the discord between two capitals.” Trump has indeed shown a friendly attitude in his policies: easing cryptocurrency regulations to provide a more open trading environment; Bitcoin breaking through $75,000, ushering in a bull market frenzy; Republican lawmakers pushing to establish a Bitcoin strategic reserve, further enhancing market confidence. All these factors have given KOHA a grand investment narrative, making him believe that $TRUMP is a long-term asset.
When KOHA discovered that $TRUMP had been on a constant upward trend and reloaded at $40, but by the following Monday, two days later, $TRUMP had moved from the FOMO (fear of missing out) stage to the profit-taking stage. With decreasing market liquidity and declining buy orders, the coins in KOHA's hands gradually became illiquid and trapped, with an average price of $36.
This Cycle is a Game of Open Cards
Another person trapped along with KOHA is Li Yi.
However, unlike KOHA, who has no experience in the crypto world and is not even aware of the major exchanges, Li Yi has been in this market for some time. Compared to newcomers who are not even familiar with exchanges, Li Yi at least knows where to trade and understands that the logic of the crypto world is not important; emotions are the only determining factor. Li Yi frequents multiple pump-and-dump trading groups, closely follows market trends, and tracks trades by some self-proclaimed “old hands” in the crypto world.
He did indeed make a profit.
During the early price action of $TRUMP, he managed to buy in at a low of $17 with his “no wisdom, must follow” strategy, and successfully sold at the peak of the price surge, making a profit. However, after making money, he became somewhat overconfident.
After making money, Li Yi did not choose to exit but instead began looking for the "next $TRUMP."
Sure enough, the Trump family did not disappoint Li Yi. Just two days after the release of Trump Coin, Melania Trump Coin ($MELANIA) was launched. At the same time, in cryptocurrency trading groups, the concept of "family coins" began to gain popularity.
Although not receiving official support, the name of Trump's youngest son, Barron, was used by the community under the banner of the "Trump family." Against the backdrop of the soaring price of $TRUMP, they boasted about the "future president's coin," and there were even rumors in the streets that even the Trump family nanny had issued a coin, quickly attracting a wave of funds to enter the market. And Li Yi was one of them.
Naively, he believed that the logic of these coins was the same as $TRUMP and that they could also skyrocket like $TRUMP. So, he invested most of his profits in the wife's coin and son's coin.
But the market did not give him a second chance.
The rest of the family coins quickly went to zero, Li Yi's principal was trapped, and his profits evaporated instantly. Currently, he has begun to inquire about how to buy World Liberty Financial (WLFI, the Trump family's decentralized finance project), attempting to recover his losses through a new speculative project. "Let's gamble again; WLFI may perhaps continue the legitimacy of Trump Coin," Li Yi said.
This round of the cycle, the biggest change is that everyone has laid their cards on the table.
No longer needing packaging, no longer needing to pretend to be a project with technological innovation, and certainly not needing to spend $5000 to hire a gun to write an extravagant English whitepaper, stacking a bunch of obscure new concepts.
The play style of this bull market is straightforward—directly hype emotions, hype celebrities, hype topics, and hype cognitive dissonance. Utilizing the FOMO emotion, they create a series of new meme coins, exploiting the fantasies of newbies.
In the past, new chain projects would still make a little effort, disguising themselves as a seemingly innovative project. Looking back at the early days of BSC, Aptos, and Arbitrum launching new chains, the market experienced the same scene—a swarm of anonymous "innovative project factories" taking advantage of the new chain effect to harvest TVL and users. Once the market hype subsides, they simply shut down communities and websites, taking the funds and disappearing without a trace.
Behind these projects are often a group of familiar faces, just disguised differently, changed a few lines of code, and turned into new trending coins. They were initially the first popular projects on a new public chain, anonymous, mysterious, without well-known backers, or audits by major companies but always being hyped up by KOLs. Relying on the FOMO sentiment in the community, they hype wave after wave of wealth myths.
But now, the market seems to have reached another kind of consensus: that this is a new gambling table, a wealth transfer game.
No one talks about the "technological revolution" anymore, no one talks about "changing the world" anymore, everyone tacitly understands—this round is lost, just wait for the next game, if you're willing to gamble and lose, come join, the crypto world was originally made for this. It is said that even the hustlers in Hangzhou nightlife know to short meme coins now.
And Li Yi is just another participant in this wealth transfer game.
Are Short Sellers the Winners?
Among the newcomers to the crypto world interviewed in this round, the only one who made money and left was Professor L.
In the $TRUMP coin storm, most people were betting on the rise, desperately chasing highs, only to end up trapped at the peak. However, there were also those who chose the opposite direction—to short—and successfully profited against the market frenzy.
Professor L, a finance professor, and a seasoned futures trader. He has long studied market structure and knows well that the price fluctuations of cryptocurrencies are far more volatile than traditional financial markets, and $TRUMP, as a meme coin, has no fundamental support, relying entirely on market sentiment, meaning it is likely to plummet after a short-term surge.
But his trading strategy is not simply betting on a market downturn, but rather a basic futures trading strategy of "hedging":
He bought $50,000 worth of spot to ensure he wouldn't miss out on the profit from the rise. At the same time, he shorted $10,000 in $TRUMP contracts leveraging 5x as a risk hedge. If $TRUMP continues to rise, his spot gains can offset the contract's losses. If $TRUMP plunges, his short position can make up for the loss, even bringing in excess returns.
Professor L does not agree with many retail investors' gambling-style leveraged trading; "The essence of a contract is to diversify risk, not to amplify returns." But most people do not understand this principle.
At the same time, Professor L also agrees with Peter Lynch's point: "The big money short sellers do not short at the peak but rather after the market has been halved, waiting for retail investors to think the drop won't continue and start bottom fishing, the short sellers like to short at that point." And this is precisely why Professor L chose not to close his short position hastily amidst the rapid decline following $TRUMP's frenzy surge.
In the crypto trading group chat, there are always people boasting about their high-leverage achievements: "Today, I opened another 50x leverage short position and made $2000!" "Yesterday, my long position got liquidated, but today my short position made it back!" However, the truth is, this kind of strategy is ultimately gambling.
The success of Professor L stands in stark contrast to those retail investors who blindly use high leverage and gamble on their luck. With the market's violent fluctuations combined with high leverage, an account can be wiped out in an instant with just one adverse price movement. Many retail investors went crazy opening leveraged long positions at the peak of $TRUMP, fantasizing about further price surges, only to be hit hard by the market's reversal, leading to immediate liquidation and loss of all funds.
Ultimately, as the price of $TRUMP retraced from its peak, Professor L's hedging strategy allowed him to secure stable profits. He did not rely on front-running like 0xSun to reap benefits nor did he fall prey to FOMO sentiment like Li Yi. Instead, he depended on rational risk management to survive in the extreme market conditions of the cryptocurrency world and consistently make money.
How Many Pitfalls Should a Newbie Expect in the Crypto World?
Amid the frenzy of Trump Coin, not only inexperienced newcomers entered the market but also many seasoned players from traditional investment markets. They had previously navigated through the A-share market, commodity futures, and even the tea speculation market, experiencing various forms of capital games.
Professor L was fortunate, but not all veterans could replicate their past successes in the crypto world based on their experience. In other words, they had to stumble through many pitfalls before fully engaging in trading.
"In the A-share market, bulls are short-lived, and bears are enduring. Speculating on small-cap stocks with low liquidity spreads is the way to survive." This is the consensus among many domestic stock investors, including "Pancake Brother." Over the years, the speculative nature of the A-share market has made them accustomed to short-term swing trading, picking up low-priced stocks, and playing with market emotions.
When Pancake Brother saw a coin like $TRUMP with a strong hype concept, he immediately felt a sense of familiarity — "Isn't this just a high-locked small-cap stock?" As a result, he decided to "take a risk."
Pancake Brother, who bought over 4,000 RMB worth of $TRUMP at the high of $69, tried to calculate the possibility of breakeven. As the price of the coin continued to drop, during an interview with BlockBeats, the price of $TRUMP was $26 per coin, which meant that if the price surged by 5%, he would need to invest an additional 50,000 RMB to lower his average cost price. However, he himself knew that this was just a "fool's dream."
After getting trapped, Pancake Brother realized that the rules of the crypto world were much more brutal than those of the A-share market: "There are no price limits, and the inflow and outflow of funds follow no established rules; whales can wash out positions in an instant. There is no regulation, and market makers can drain liquidity at any time, controlling as they please. There is no time constraint, with 24-hour trading; the market never sleeps, giving retail investors no chance to catch their breath." Pancake Brother, filled with emotions, felt like venting for days on end.
Many investors who were used to short-term strategies in A-shares not only failed to make money in $TRUMP, but instead, due to attempting to engage in scalping and repeatedly entering and exiting positions, ended up losing their principal.
However, the cryptocurrency circle is a ruthless place. After overcoming the mismatch between traditional stock trading and cryptocurrency trading, Pancake Bro realized that he had stepped into another pitfall.
"I thought there was no hope of breaking even, so I prepared to cut my losses, only to find out that what I had bought was a fake coin." Before the spot trading platform went live, Pancake Bro followed the operations of the senior members in the trading group and purchased his first $TRUMP using a web3 wallet on a certain trading platform.
Since he had never used a web3 wallet before, he had been relying on the group's quotes. After making the purchase, he didn't bother to check further until he was ready to sell. It was then that he discovered his money hadn't actually entered the real market but had been swallowed by a hacker-deployed "fake coin contract."
And this was just a relatively straightforward way of getting "rekt" in the crypto world. There are many more pitfalls waiting for "Pancake Bro."
These mixed-quality pump-and-dump groups in the cryptocurrency world are like boiling a frog in warm water. Initially free, they use some female bloggers' beautiful photos, screenshots that suggest earnings, or photos of buying cars and houses to attract people. Inside, the senior members warmly teach newcomers how to open an account on a trading platform and how to trade, and at this stage, the senior members can earn a tuition fee through rebates from the trading platform.
Using retail investors' funds to create artificial buy/sell walls or to generate transaction fees is considered mild. The most direct approach is to lead the group and coordinate the rug pull. They claim to have "precise insider information," but in reality, it's a premeditated scam. Currently, the most common scam on Xiaohongshu (Little Red Book) is the so-called "quantitative robot trading strategy," which claims a monthly return of 30%.
However, the cryptocurrency world is a completely different realm. The game here is a high-frequency battle measured in "seconds," where every missed second could mean a huge loss. What's worse is that many veteran players, relying on substantial capital, often adopt a "heavy re-entry of capital" strategy, only to become targets at the market's "peak." The market manipulators, long before these "whales" entered, were already prepared, waiting for these "big fish" to take the bait and swiftly absorb their funds.
In this no-smoke battlefield PvP showdown, the flow of funds and control of the market always remain in the hands of a few. For players still clinging to traditional market thinking, the rules of the crypto world often catch them off guard because here, risk and opportunity coexist, but more often, it's the risk that prevails.
When these seasoned players regained their senses, they found that not only did they not earn a hefty fortune in the crypto world through years of experience, but instead became a typical example of being "rug pulled" upon entry. The familiar rules of thumb were rendered useless in the face of this brand new market,
and all of this was the tuition fee they had to pay when entering this industry.
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China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk
Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk
Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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