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Base Builder Talk: How a China-based Developer Endorsed by Base is Going All-In on the On-Chain Economy
The Base protocol has rapidly emerged as a leader in the Ethereum L2 ecosystem during the cryptocurrency boom, thanks to its astonishing growth rate and innovative capabilities. Its success is not accidental but rather the result of the collective efforts of numerous developers, builders, and community members. Being the crypto media outlet in the Asia-Pacific region most focused on the Base ecosystem, BlockBeats has specially curated the "Base Builder Talk" column to gain better insights into the development path and future opportunities behind the Base ecosystem. The column invites Asia-based teams, developers, and community contributors deeply involved in and actively building the Base ecosystem to share their journeys and unique insights. Through this series of interviews, we hope to enable more people to understand the community resilience and boundless potential of Base.
Base Protocol Lead Jesse States Supporting Chinese Developers is the Top Priority for 2025
In the first edition, BlockBeats invited 183Aaros.base.eth, a researcher at Onchain who was recently retweeted by Jesse. From traditional economics to on-chain economics, he showcased a new paradigm of "production-consumption-reconsumption-reproduction" in the Onchain world with unique dialectical thinking and practical experience. In the conversation, Aaros mentioned his understanding of the "cyber reality," interdisciplinary thinking on on-chain economics, and enthusiasm for building the Base ecosystem. Through his narration, we may catch a glimpse of the significant role Base plays in shaping the on-chain economic structure and fostering new application forms.
Below is the full interview content, reorganized for readability:
BlockBeats: Please provide a brief background about yourself and why you embarked on the crypto journey.
Aaros: I studied Economics for my undergraduate degree in the UK, and my Master's was in investment banking. In 2018, I joined a hedge fund recommended by a law school assistant professor, where I was mainly responsible for screening crypto projects for them. It was also during that time that I truly entered the "rabbit hole" of cryptocurrency.
Image Source: Aaros Personal Website
While the traditional financial industry was relatively conservative towards the crypto industry at the time, I personally had high hopes for the future of cryptocurrency. Based on my reflections on currency and logical consistency, I bought a significant amount of Cardano tokens at the time. Later, after returning to my home country, I worked in traditional finance for a period, mainly in industry research and the IPO market. At the same time, I had been continuously investing in cryptocurrency, and after gaining my first bucket of gold in the 2021 crypto bull market, I resigned to go all in on Web3.
BlockBeats: So, let's talk about your crypto journey over the years. Why did you choose the Base ecosystem?
Aaros: My main project is Onchainomics. From 2018 to 2021, it was a phase where I conducted industry research, made investments, traded, and laid the foundation for an economic framework. Then, in 2022, after several partners joined me, incorporating philosophy, the economics of desire along with my previous traditional economic viewpoint and trading indicators, we established a consistent yet highly complex core predictive system.
Onchainomics is a subset under this framework, with many concepts and forecasts yet to be elaborated. I chose Base because I resonated with Jesse's slogan "build a global onchain economy." This statement aligns well with my vision and mission over the years; it's exactly what I've been looking for.
During Onchain Summer, Jesse also mentioned in the Buildathon that a builder could be not only a coder but also a creator and a community builder, all are welcome to participate. This broad perspective deeply attracted me. Although I can code a bit, my strength lies in economics and industry research. Developing a comprehensive project independently in Web 3 is quite challenging. After hearing Jesse talk about this narrative, I felt like I could also participate. I really liked its narrative. I want to engage more in this ecosystem and contribute my efforts. It's a very pure thought — I want to play with everyone, and if you allow me to join, I'm in.
BlockBeats: Over the past year, Aaros has had many award-winning papers. Could you first talk to us about the sources of inspiration for your usual writing and your work style?
Aaros: My sources of inspiration mainly come from the aforementioned core predictive system, integrating hot topics and theory dissemination. There is a contradiction in my work style: the core predictive system may not be directly understandable to most people as it spans various disciplines. However, what each reader can understand actually stems from these core predictive systems.
Aaros's Paragraph Homepage
What Is Onchain? Deconstructing On-chain Economics
BlockBeats: How do you understand Onchain? Does it bring the real world onto the chain?
Aaros: We have a rather special understanding, using dialectics to deconstruct and reconstruct the proposition of reality and virtuality. Traditionally, reality and virtuality are seen as opposites, but where is the breakthrough point? For example, take Meituan. Is it virtual or real? Here, it seems that this proposition is somewhat deconstructed, and no matter which way you think about it, it seems both right and wrong. This is where dialectics come into play.
We have coined a term called "cyber reality" — not the binary opposition of virtual or real, but a new kind of reality, a new paradigm. Narratives like encryption, Onchain, and Agents, in terms of their impact on consumption and production, are not binary oppositions.
If we are stuck in the narrative of the past, we cannot see the possibilities brought by the new narrative, so we need to use the definition of cyber reality to move it towards the so-called reality. In this proposition, there is no pure virtual because the virtual is also real. Therefore, Onchain is also a realization of cyber reality.
BlockBeats: After discussing Onchain, let's talk about On-chain Economics. On your website, you define it as an integration of blockchain economics, tokenomics, and traditional economics, making it an interdisciplinary field. Could you break down this concept?
Aaros: The concept is encompassed within cryptoeconomics. The starting point was this because at that time, we had not yet seen clearly the relationship between Onchain and Offchain, virtual, and real. So I tackled it in a somewhat classificatory or categorical way to define it, but in reality, I did not provide an ontological status; we just saw a gap between some disciplines, and we described this gap.
Traditional macroeconomics does not pay much attention to on-chain economic activities, and its follow-up is relatively slow. The MIT Cryptoeconomics Lab has contributed to some discourse, but it has not been fully promoted. On the other hand, on-chain, because Ethereum developers are more focused on cryptography, the entire industry has a trend of studying game theory as the main line of cryptoeconomics.
Pure game theory research, Tokenomics research, I personally think is relatively narrow. After the emergence of many on-chain activities such as the Base ecosystem, the entire market is generating more new economic activities, many of which have not been studied by scholars. Our initial starting point was just to discover this gap. Later, we found a quasi-ontological status for this gap, that it is truly something new, not just virtual, not just real, it is the "cyber reality."
BlockBeats: As an individual participating in the crypto economy, what are some common sense knowledge that we need to know?
Aaros: Do not persist in using modern industrialism and productionism like looking for a needle in a haystack. It is not the more you produce, the better. Productivity is one aspect, and production structure, production relations, consumption structure, income structure are another. Global production oversupply actually requires creating demand. Creating real demand or fake demand, as long as you can digest this contradiction, it will be a boost, and the economy will give you a certain status and return. I think it is more similar to Base's culture, focusing on the consumption end rather than the production end. Traditional economics focuses more on how to improve production efficiency, but the cycle we are currently in may be: without consumption demand, everything is impossible.
BlockBeats: What do you think consumption is? Participating in the on-chain economy, mint NFTs, or something else?
Aaros: Yes, participate, engage, and then ordinary individuals can consume more of these things.
BlockBeats: Just consuming, in simple terms, how can individuals make money on-chain?
Aaros: Money is currency. In the production-consumption paradigm, currency is an intermediary link. In fact, consumption is not just spending money. For example, Capital is not just money, it is also skills, it is also your cognition. So you have to construct it yourself, but to construct, you need handy tools. This building is not production; it is a structure that constructs a new narrative, new scenes, and a new life.
For example, let's take another example. Using an AI Agent is a form of consumption behavior. Of course, you can also see it as the other end, utilizing an AI Agent to produce an article is a form of production behavior. However, when you first learn to use it, you are a consumer participating in the cycle. Your first step is consumption (usage) to join this wave, and then you realize what you can produce on top of AI.
Onchain's "Production-Consumption" New Paradigm
BlockBeats: Jessie recently posted an update, saying that two AI agents helped him buy a pizza. Aaros, could you discuss how in this new paradigm, AI and humans collectively participate in the on-chain economic production-consumption process?
Aaros: I think Jessie has perfectly exemplified that paradigm. Through his consumption behavior, he explains why consumption is important, why the consumption scenario is important, and why creating consumption is important.
Our original paradigm refers to the production function, which is production, followed by consumption. In the past, we always thought of production and consumption as two ends, and the new approach is from p to c' and then to p' and back to p. In other words, after the traditional way, there will be a c', which I previously wrote in the Notes as "to create." Jesse's act of having two AI agents collaborate to order pizza is the essence of that c'. It is not just a consumption behavior but a kind of creation that builds a whole new paradigm, hence called "to create."
It may seem a bit complex to understand. p' is equivalent to after you create c', you would think about how to optimize various aspects of this c'. The first step is to get things done, meaning to buy the pizza. However, many small details are not perfect; it's just a demo. Still, by creating this consumption scenario, the subsequent p' is about completing and perfecting various aspects of this consumption scenario. However, this is not actually production; it is an improvement in production efficiency. It is not about solving the "buying pizza" problem in the P domain but addressing the "two AI agents" issue in the P' domain.
This is somewhat like building a mother machine. A mother machine is the machine in the mechanical industry that produces bearings, and the meaning of this 'p' is a machine's machine. If you want to create the next generation of a cyberspace economy or a crypto economy, you must first build the mother machine. For example, Base's OnchainKit is a kind of mother machine-building behavior, including Ethereum constantly emphasizing infrastructure, which is also a way of a mother machine—first, someone imagined or demonstrated a new narrative and a new consumption scenario, and then proceeded to mass-produce mother machines that can support consumption.
BlockBeats: Speaking of building a machine's machine, is the Base Builder House plan you sent me also considered a kind of action to build this machine?
Aaros: Yeah, 706Creators initiator Shirlene came to me. She had previously done a hacker house at Solana and Sui, and this time came to me wanting to do a builder house in Shanghai and Shenzhen, collectively exerting efforts to develop the Base ecosystem in the Chinese community. So, we are planning to hold a building creating and living event in February.
BlockBeats: What will be the final output form then?
Aaros: The ultimate output direction is that 10 projects can go Onchain, some Demo onboarding Onchain. Through this build house, the Chinese community partners in Base will have a closer connection and be able to help each other, just like the English-speaking Base builder community.
Base Builder House Sign-up Link
BlockBeats: There is a viewpoint that believes American entrepreneurs have no idea how to develop applications, and Onchain is simply reinventing the wheel. What's the point of moving Dianping or Didi to the chain? How do you see this?
Aaros: We can link back to the paradigm I just mentioned, this is not a repeat of the mass production. For example, Jesse's behavior, he is in c', his focus is not on how well p is done, not the question of how to get the pizza faster, but on creating a new c', another thing is what Musk advocates to do is also from c' to p', "to create", "to produce".
BlockBeats: It means not to consider from a biased practical perspective, but to focus on innovation.
Aaros: Yes, narrative or cognitive innovation, and then the next step is that we start again as if there was no Meituan before, and we recreate a Meituan, such a process. I think the so-called "everything on the chain" narrative in 2017 was at the first p, but now the Onchain is at the position of c'/p', which is a different place, more about the different monetary mindset, where money as an important intermediary in the equation causes demand to change.
BlockBeats: So how are these demands generated? Or are the current demands sufficient to generate those applications?
Aaros: c' can be intuitively felt in one sentence, which is "We choose to go to the Moon", the person who made that choice is doing c'. It's not about how well the spaceship to the moon was built, but about "We choose to go to the Moon", this decision, this belief.
Ethereum Needs to Focus on the "Greater Ecosystem"
BlockBeats: These days the Ethereum Foundation has been caught in a public opinion storm, we can talk about the entire Ethereum ecosystem. As someone deeply involved in both the OP and Base ecosystems, what are the differences between these two ecosystems at the moment? And what stage is the L2 War currently in? Is there any sign of a winner-takes-all situation, or is it in a stage where the outcome is still uncertain?
Aaros: I have been following this recent issue. I agree with Vitalik's attitude of focusing on the core Top Developer, and on the other hand, the community demands more transparency, openness, marketing, and so on, which I think is also reasonable.
The relationship between OP and Base has always been very close, as Base is one of the initiators of the OP Superchain, and now many Base experts also serve as advisors to various OP committees. Base is currently the most expensive L2 in terms of on-chain settlement fees, and in this regard, I don't think there should be a winner-takes-all concept. Base is also quite open to Solana and other excellent ecosystems, not in a closed-door state, and very much welcomes collaboration among ecosystems.
On the other hand, the relationship between OP+Base and Ethereum may need to be closer. Ethereum's support for L2s has seen changes this year, such as interoperability between L2s. The Ethereum Foundation (EF) has also initiated some activities to support this, and there are some EIPs supporting improvements in this area.
BlockBeats: Vitalik has just released an article, and the most widely spread viewpoint in it is that he has begun to talk about consolidating Ethereum as the main asset of a larger Ethereum economic system, encouraging L2s to support Ethereum, and then returning a portion of the fees to L1, such as through burning permanent staking or donating rewards. Can we understand this as Vitalik feeling a bit urgent, facing internal and external challenges?
Aaros: Over the past few years, we have seen the entire Ethereum ecosystem place a strong emphasis on topics such as Tokenomics and MEV minimization after the 2.0 upgrade. However, at a larger ecosystem level and between different L2s, there are few discussions on cross-ecosystem macro and microeconomic issues. For example, the topic of information asymmetry, which is obvious in microeconomics, could have been foreseen in the era of ETH 2.0 but had to wait until conflicts erupted before being addressed. This is an area where improvements can be made.
BlockBeats: Can we blame the Ethereum Foundation for inaction?
Aaros: I think this is a blind spot that is easy to fall into in a decentralized environment, where everyone focuses on what they are good at, and areas where they are not proficient are overlooked and left unattended. However, this is normal. Of course, I am not optimistic that researchers will shift from a microeconomic and technologically deterministic view to a more holistic or reconstructive perspective to focus on macro issues.
BlockBeats: Why is that?
Aaros: The so-called mass adoption requires bridging to the traditional economy, onboarding, but so far I have only seen some slogans or marketing stuff, without any related research or organization focusing on this advancement. To be honest, there are quite a few people in the ecosystem who don't think my work is research. They might think that you haven't researched topics like MEV minimal extraction, haven't focused on technical details or those seemingly very technical issues, that's what they consider research, not this narrative or model perspective that I take.
BlockBeats: Do you think you need to clear your name?
Aaros: We are a kind of essentialist research, just seeing that I said it, whether there is an audience, whether readers can understand, there is actually no specific connection to our theory for now.
BlockBeats: In 2024, the trend rotates quickly. In 2023, I think it's okay. Friendtech can get hype for half a year. Starting from Blast, every trend lasting two months is already considered long. In this rhythm, how do you maintain your own pace, find your principles, and build your framework?
Aaros: This might be the talent of an INTP hahaha, a kind of thinking mode with primary introverted logic, insisting on a complete logical system. The suggestion may be to try to focus on some laws that remain effective after a paradigm shift.
BlockBeats: Recommend three researchers you admire the most.
Aaros: Professor Paul Dylan-Ennis from University College Dublin Business School. Then there are Teacher Luo (0xLuo) and Teacher Pingfeng. They have a keen sense of smell, act purely, and can give me some very good dehydrated perceptions.
BlockBeats: How do you define yourself then?
Aaros: My own perception is an Engine Starter.
BlockBeats: What kind of engine?
Aaros: The Engine of History. I have a pinned post on Farcaster where I talk about going to the very edge of history, and that's basically what this is—self-positioning.
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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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