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Trump's "Pump and Dump" Cryptocurrency Reserve Strategy, Who Is the Next Crypto ETF?
After enduring a downturn in the market, which felt like a cold shower, the cryptocurrency industry has finally received a shot in the arm. On March 2, local time in the United States, Trump took to social media to express, "Following years of suppression by the Biden administration, the United States' cryptocurrency reserves will enhance the position of this key industry. That's why my digital asset executive order instructs the President's Working Group to advance a cryptocurrency strategic reserve including XRP, SOL, and ADA. I will ensure the United States becomes the world's cryptocurrency capital. We are making America great again! I also like Bitcoin and Ethereum!"
Trump's "pump" effect was immediately apparent, with BTC and ETH both surging over 10%, SOL skyrocketing over 20%, ADA rising over 70% to become the eighth largest cryptocurrency by market capitalization, and XRP's circulating market cap surpassing Ethereum's for the first time. The overall crypto market cap rebounded by 9% to $3.25 trillion.
With Trump's announcement of the "U.S. Cryptocurrency Strategic Reserve" plan, the most crypto-friendly U.S. Congress in history has emerged. Serving as a channel for traditional funds into the crypto ecosystem, the SEC's stance on crypto assets has shifted from "strong regulation" to "crypto-friendly." Last month, the SEC successively greenlit applications from several U.S. traditional giants for ETFs related to LTC, DOGE, SOL, and XRP. According to analysts James Seyffart and Eric Balchunas from Bloomberg, the market currently perceives a relatively high likelihood of approval for LTC, DOGE, SOL, and XRP spot ETFs. Market expectations for the launch of ETFs for other mainstream crypto assets on the U.S. capital market have significantly increased.
Read more: "Quick Look at Latest Developments of Multiple Crypto ETFs: SEC Review Speeds Up, SOL and LTC Ahead"
SEC's Latest Confirmation of ETF Application for Altcoin
Looking back at the development of crypto ETFs, this process has been full of twists and turns. After at least 30 rejections of Bitcoin spot ETF applications over the past 10 years, the market finally welcomed the formal approval and listing of a US Bitcoin spot ETF on January 11, 2024. On July 23 of the same year, the crypto market once again witnessed a historic moment as the SEC (U.S. Securities and Exchange Commission) formally approved an Ethereum spot ETF. 2024 can be seen as the year of crypto ETFs, with Bitcoin and Ethereum being the only two confirmed crypto ETFs so far.
From this perspective, the highly positive news last week was indeed rare, sending out an important positive signal to the entire crypto market. If these ETFs are ultimately approved, they will bring significant potential opportunities to the underlying assets and the entire cryptocurrency market. Investors will be able to enter the market more easily, driving a significant inflow of funds and thus improving market depth and stability.
Below is the analysis of the SEC's latest confirmation of an ETF application for an altcoin, covering the expected approval probability, regulatory compliance assessment basis, application progress, and market performance data in the last 30 days, sorted from high to low based on Bloomberg analysts' predictions of regulatory approval rates.
LTC (Litecoin)
ETF Approval Probability: 90%, considered by the SEC as a Bitcoin clone with decentralized characteristics, and is likely to be classified as a commodity. It is currently the most advanced altcoin in terms of approval progress.
Currently, Grayscale and Canary Capital have submitted LTC spot ETF applications, both of which have been accepted by the SEC. Bloomberg analyst Eric Balchunas believes that Litecoin will be the next crypto spot ETF approved by the SEC.
DOGE (Dogecoin)
ETF Approval Probability: 75%, considered by the SEC to be a clone of Bitcoin and Litecoin, with a high probability of being classified as a commodity.
Currently, there are 2 institutions that have submitted applications for a DOGE spot ETF, namely Grayscale and Rex, both of which have been accepted by the SEC.
SOL (Solana)
ETF Approval Probability: 70%, currently still considered a security by the SEC.
Currently, 5 issuers have submitted applications for a spot Solana ETF, namely Grayscale, Bitwise, VanEck, 21Shares, and Canary Capital, all of which have been accepted by the SEC. This marks the first time the SEC has acknowledged an ETF application for a token that was previously referred to as a "security."
XRP (Ripple)
ETF Approval Probability: 65%, primarily impacted by SEC lawsuits and needing to resolve regulatory disputes.
Currently, applicants including Grayscale, Bitwise, Canary Capital, 21Shares, and Wisdomtree have applied for an XRP spot ETF. Perhaps due to the impact of the previous lawsuits, only Grayscale's application has been accepted by the SEC.
Related Reading: "A Quick Look at the Latest Developments of Multiple Crypto ETFs: SEC Review Accelerates, SOL and LTC Making Progress"
After Ethereum ETF Approval, How Is It Performing Now?
The Ethereum ETF officially entered the U.S. capital market on July 23 of last year, with Ethereum's price around $3200 on that day. Market data shows that the net inflow of the Ethereum ETF in the past six months amounts to $2.82 billion, equivalent to Wall Street purchasing nearly 1% of Ethereum's volume, while Ethereum's price has now dropped to around $2500.
This is partly because Grayscale has been continuously selling off the Ethereum ETF, becoming the market's largest seller, thus hindering Ethereum's rise; on the other hand, Ethereum is more severely affected by whale selling compared to Bitcoin, and currently, Ethereum is still absorbing the potential selling pressure from whales.
However, the good news is that the entity World Finance Liberty, associated with Trump, is continuously accumulating Ethereum.ETF net inflows and continuous buying by Trump-related entities indicate a positive attitude towards Ethereum by long-term investors in an increasingly open policy market environment.
By extension, if LTC, DOGE, SOL, XRP ETFs are approved in 2025, although ETFs in this category will become an inflow window for traditional funds, it does not mean that these tokens will experience a significant upward trend.
ETF 2.0 for Cryptocurrency Under the Trump Administration
Looking at the development history of the cryptocurrency ETF, it is not difficult to see the significant positive impact of Trump's return to the White House on the entire market this year. Bloomberg analyst Eric Balchunas pointed out that before Trump won the election, except for Litecoin, the approval probability of all other assets remained below 5%. It is expected that as applications enter the approval process, as the SEC's decision deadline approaches, the approval probability of cryptocurrency ETFs will continue to rise.
Related Reading: "Coinbase 2025 Outlook: More Cryptocurrency ETFs to Emerge; Stablecoins Still a 'Killer App'"
So the question is: Why has the process of cryptocurrency ETFs been so difficult before? This can be traced back to the SEC's categorization of cryptocurrency.
Cryptocurrency: Security or Commodity?
Back in 2014, the debate on whether cryptocurrency should be legally defined as a security had already begun.
Back in the day, the Ethereum network's sponsors funded the network's development by selling 60 million Ether before the network officially launched a year later. Similar to a traditional Initial Public Offering (IPO) of common stock, the Ether ICO raised a fundamental question: whether crypto assets fit the definition of a security under U.S. federal securities law.
Today, this question remains a crucial criterion in determining whether a cryptocurrency ETF can be approved by the SEC. Its answer not only determines how and if crypto assets can be sold to the public but also dictates whether we must hold and trade these crypto assets under the current rules and market structure established for securities over the past 80 years.
Central to this debate is the Howey Test, stemming from a 1946 U.S. Supreme Court ruling in the SEC v. Howey case. The Howey Company leased citrus groves, promising to manage the land and sell the fruit, with investors receiving profits. In this litigation, the SEC prevailed as the market regulator deemed these contracts to fall within the definition of a security.
Thus, the famous Howey Test was born, becoming a key standard in the U.S. securities law framework to determine whether a transaction constitutes an "investment contract." Its core logic revolves around four elements: first, investors must commit money or assets with monetary value (such as cash, cryptocurrency, or goods), known as the "Investment of Money"; second, these funds must be pooled into a "Common Enterprise," where investors' returns are closely tied to the success or failure of the project as a whole rather than operating independently; third, investors' primary motivation must be based on an "Expectation of Profit," seeking economic returns through investment rather than pure product or service use; and finally, the realization of profits must be "predominantly from the efforts of others," meaning investors do not directly partake in management but rely on third parties' decisions and operational activities (such as token value depending on the team's development rather than user mining). These four elements are interrelated, collectively forming the standard for determining whether an "investment contract" is considered a security. Particularly in the cryptocurrency field, if a project fails to circumvent these conditions, it may face legal risks of being deemed an unregistered security.
In the Howey Test, all four conditions mentioned above must simultaneously exist for a transaction to be classified as a security. This standard can be seen as a compliance guide for cryptocurrency: if a project wants to avoid being classified as a security, it must break at least one of these conditions, such as emphasizing decentralization or user-driven contributions.
In terms of actual precedents, the SEC has stated that Bitcoin and Ethereum are "sufficiently decentralized," therefore not meeting the fourth criterion, and are not securities. However, institutional sales of tokens like XRP have been deemed securities, while the XRP tokens circulating in the secondary market are considered commodities.
Currently, Bitcoin and Ethereum have been recognized as commodities. Litecoin's high probability of approval stems from its PoW model similarity to Bitcoin, and the Dogecoin protocol is a clone of the Litecoin protocol, which is itself a clone of the Bitcoin protocol, so it also has a high probability of being recognized as a commodity. The classification of Solana and XRP has not been conclusively determined, especially given the pending litigation between XRP and the SEC.
If you are interested in a deeper understanding of the tug-of-war between crypto projects and the SEC and a more comprehensive set of criteria, you may want to explore some notable cases: "Why These Five Tokens Are Securities? SEC Provides Answers", "ConsenSys Counters SEC Point by Point, Why Ethereum Is Not a Security".
What Impact Does This Have on the Crypto Market?
Bloomberg analysts predict that the SEC will make a decision on proposed meme coin ETFs in October of this year. It is foreseeable that if meme coin ETFs are consecutively approved, various bullish news events will likely continue to attract more conservative and institutional investors, thereby changing the market's investor base. In this policy environment, the crypto market may experience increased liquidity, price surges, and changes in investor structure. Therefore, the approval of more ETF products will bring more funds into the crypto market, enhance market liquidity, and thus reduce price volatility.
In addition, due to regulatory arbitrage, the introduction of an ETF in the United States may directly trigger imitation in other countries and regions around the world. This imitation may to varying degrees drive the global adoption of cryptocurrency, especially in regions with more lenient regulations, where cryptocurrency adoption may experience even more rapid growth. Global policy convergence can not only effectively reduce the compliance costs of cross-border transactions but also further eliminate investors' concerns about legal risks, thereby promoting more institutional and individual participation. This trend may accelerate the transformation of cryptocurrency from a fringe asset to a mainstream financial instrument, pushing its status in the global economy to continue rising.
As the Trump administration further supports the crypto industry, U.S. states are gradually introducing 'Strategic Bitcoin Reserve' legislation, coupled with Republican control of both the Senate and the House of Representatives, Congress may have the opportunity to pass cryptocurrency-related bills. Once legislation is passed, cryptocurrency may have the opportunity to become a new type of asset class that is neither a security nor a commodity, which would be revolutionary for the crypto market.
Where Will Crypto ETFs Go This Year?
Below are predictions from industry institutions and KOLs on the development of crypto ETFs in 2025 (the original article is adapted from ChainCatcher, "2024 Crypto ETF Landscape: AUM Surpasses $120 Billion; Shifting from Edge to Mainstream"):
Forbes predicts that an Ethereum ETF may integrate staking for the first time, while spot ETFs for mainstream tokens like Solana are expected to accelerate, and weighted crypto index ETFs may emerge to cover a wider range of assets.
Research institution Messari emphasizes that with the positive flow of funds into Grayscale's GBTC, the launch of a Solana spot ETF in the next one to two years is "almost inevitable," and the overall inflow of funds into ETFs will continue to rise.
Coinbase, on the other hand, believes that while issuers may try to include more tokens like XRP, SOL, LTC, HBAR in the ETF asset scope, such expansions may only benefit a few tokens in practice.
The ETF issuer VanEck has put forward a more specific regulatory outlook, predicting that the new leadership of the U.S. SEC or CFTC will approve multiple spot cryptocurrency ETPs, including the VanEck Solana product. Additionally, the Ethereum ETP may enhance its utility through staking support, while both Bitcoin and Ethereum ETPs may adopt a physical creation/redemption mechanism. If the SEC's Rule SAB 121 is repealed, it will also drive deep involvement of traditional financial institutions in cryptocurrency custody.
Another issuer, Bitwise, holds a positive view on a Bitcoin ETF, expecting that by 2025, its inflows will surpass those of 2024, attracting institutional funds worth trillions of dollars.
Overall, various institutions predict a significant development for cryptocurrency ETFs in 2025. The diversification and innovation of ETF products, regulatory adjustments, and mainstream fund inflows will be the core driving forces of the cryptocurrency market in the next two years.
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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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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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