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Former Star Project Xterio Faces Community Backlash After Token Launch, Leaving Many Investors Empty-handed
Original Article Title: "Xterio TGE Controversy: Many Players Lose Money, What Happened to the Once-star Project?"
Original Article Author: Arain, ChainCatcher
「It's the first time I've seen a rug pull with zero gains.」 Crow (alias) commented in the Xterio rights protection group.
Web3 game development and operation platform Xterio was once a star project in the market, attracting many investors with strong team background and substantial capital support. A netizen named "Little Figure" recalled the reason for investing in Xterio: "Suddenly remembered why everyone around us lost an average of 1 million in this project. At a time half a year ago when the project announced a Binance investment, there was an occasion where I had dinner with someone from Xterio, and then we both ended up FOMOing into a position. That dinner was so expensive, I want to cry."
However, what awaited investors was the harsh reality of widespread losses. On January 8th, Xterio launched its Token Generation Event (TGE), and investors' dissatisfaction due to losses continued to rise. As Xterio's key opinion leaders (KOLs) continued to expose and display loss data, community dissatisfaction quickly escalated, and various Xterio rights protection groups started to stir up.
Losses, fraud, humiliation... the dream of wealth shattered, and the once bright star project seemed to have fallen from grace in an instant.
TGE Controversy: Community's Criticism Hits Xterio Hard
The Xterio founding team members come from top game developers such as FunPlus, EA, NetEase, and have also received investments from well-known institutions such as Binance Labs, FunPlus, and FTX.
Compared to many Web3 native projects, Xterio can be said to have been "born with a silver spoon." On August 30, 2022, it completed a $40 million financing at a $3 billion valuation, with known institutions such as FunPlus, Makers Fund, FTX Ventures, XPLA leading the round, and numerous industry giants joining the investment, attracting a lot of attention. Following that, on July 13, 2023, Binance Labs injected another $15 million into it, helping its game development in AI and Web3 and token launch plans.
Due to the previous underperformance of the NFT market, investors had already suffered losses in Xterio. An investor told a ChainCatcher reporter that they had purchased Xterio's small dinosaur NFT (from the in-house game Age of Dino) at an average price of 1-1.2 ETH, and according to OpenSea website data, the floor price of the small dinosaur NFT has been below 0.3 ETH for the past three months.
Visible losses are not the main factor triggering community sentiment. The real catalyst was the TGE event on January 8, which completely ignited the powder keg between the community and the project:
Xterio officially released the tokenomics plan on January 2, planning to issue 1 billion XTER tokens: 28% allocated to the community, with 20 million tokens fully unlocked at TGE; 26% allocated to the ecosystem, with 20 million tokens fully unlocked at TGE; 15% allocated to investors; 12% allocated to the team; 9% of the tokens allocated for marketing, with 15 million tokens fully unlocked at TGE; 4.25% of the tokens allocated to the treasury, and 5.75% of the tokens used for providing liquidity and staking at TGE.
After announcing the tokenomics plan, Xterio also released information regarding the Age of Dino's rewards at the TGE event, promising that Age of Dino would receive a 2% XTER token ecosystem grant during TGE. Additionally, at least 8% of the Age of Dino tokens would be fully unlocked and distributed to NFT holders and players during AoD's TGE.
After the TGE, many investors reported that the actual token airdrop ratio differed from what was promised. ChainCatcher conducted centralized interviews with investors after the TGE event.
Xiao Tao (alias) was one of the many investors who incurred losses. He was a personal player of Age of Dino. During an interview with ChainCatcher, Xiao Tao stated, "You airdrop the correct proportion, the token price is not good, I understand. Airdrop 0.5%, isn't this fraud? This is a complete insult to investors!"
Xiao Tao showed ChainCatcher a screenshot of the airdrop contract address he used during the project's TGE, saying, "The total tokens available for airdrop from the contract address were 20 million tokens, but only 5 million airdropped tokens were claimed after one day." Xiao Tao also told ChainCatcher that he had invested 50,000 U in the Xterio project, hoping for a generous return. However, reality dealt him a heavy blow, with his investment returning only 4,000 U in the end, resulting in a staggering 92% loss.
Investor Peng Peng stated, "Based on the distribution of airdropped tokens, the team only airdropped 0.5% to the community and embezzled the remaining 1.5% for themselves. Moreover, with so many activities and thousands of NFTs, they only airdropped 2% to the community. The project team took the liquidity that should have been provided and staked it on exchanges." Peng Peng showed ChainCatcher another set of screenshots.
Siemens (alias) then did some calculations and stated that 80% of the aforementioned airdrop should have been taken by the project team: "Excluding the AI points (at the end of last year, Xterio collaborated with Bybit Wallet on an Xterio AI Agent points event), the community players received approximately less than 3 million tokens. Within these 3 million, there was also the project team's insider trading, with the project team receiving at least 1,000 dinosaur NFTs, of which over 85% are rare NFTs, holding a large share. So after comprehensive calculation, including the AI botting players, the actual amount received by the community was just under 4 million tokens, accounting for about 3.5% of the initial circulation of 112.5 million."
Little E (alias) pointed out another issue, which was that Xterio inflated data during the TGE, diluting player equity. He revealed screenshots of his chat with Xterio's business person Kelly on Telegram to ChainCatcher, where it can be seen that in the screenshots, he asked Kelly if the total score would exceed 100 million. Kelly's response was "not very likely," but eventually, Little E found during the airdrop period that the points had become 270 million. Little E claimed this was the equivalent of adding at least 170 million points out of thin air.
It is understood that the points mentioned by Little E refer to points rewards distributed by Xterio in some past events, which the official had promised would be converted into airdrop benefits in the future. Users could obtain Xterio ecosystem points through activities such as Meet your Anima (Palio), Overworld Arena, and Dinoski (Age of Dino).
In addition to individual investors, other roles in the Xterio benefit chain also suffered losses to varying degrees. Previously, there were reports that a game studio was promised Gas refunds by the project team. The studio used over 10,000 accounts to inflate data but did not actually receive the promised refunds. During the interview, a worker from the game studio told ChainCatcher that they incurred losses of 80,000 U.S. dollars on Xterio, but did not disclose the specific reasons for the losses.
Crypto KOLs (Key Opinion Leaders) have been continuously criticizing the project during the Xterio TGE, becoming a prominent group in this controversy.
The Ice Frog, who has nearly 60,000 followers, claimed to have exchanged every 30U for 1 coin, expecting a staggering -97% return rate, with cumulative losses amounting to a high of 300,000 U.S. dollars (note: possibly unrealized losses).
The prominent influencer with over 110,000 followers, known as "Brother Big Lion," directly criticized the project, claiming that the project team had been engaging in community manipulation for over a year. The community spent money and time completing tasks, but everyone only received a 20 million airdrop. On the first day of the Token Generation Event (TGE), the project team released a 15 million airdrop to themselves through marketing shares. "Now, this airdrop has caused me to have a significant psychological shadow on transitioning from the so-called Web2 successful entrepreneur to Web3." While accusing the unfairness of the TGE event, he expressed dissatisfaction with the team behind the project and reminded market participants to "demystify" the entrepreneurial aura.
Siemens stated that the project's founder, Dong Ruibao, often took "unreasonableness" as his motto and continued to engage in community manipulation by using the excuse of "I am irrational in doing things" whenever an issue arose.
Key Opinion Leaders (KOLs) took turns to "criticize" each other's comments, and the community's negative emotions continued to spread, resulting in Xterio's reputation plummeting during the TGE.
The True Face of Crisis and Internal Chaos
In addition to the unfair distribution, internal chaos within Xterio also emerged during the crisis.
0xkunkun pointed out that Kelly was responsible for Xterio's listing and business negotiations but frantically hinted in the Telegram group that Xterio would be listed on Upbit before the TGE, causing the NFT floor price of Little Dinosaur to rise to 0.6 ETH. However, after the TGE was announced, the Little Dinosaur was directly dumped by the community to 0.15 ETH.
Mr. D (pseudonym) expressed that project staff openly pumped token prices in the Discord, conducting off-site purchases at 0.3U (USD) per point, creating a false impression of high token value.
"Promoting tokens to oneself is completely illegal; it's like a listed company pumping its stock, and the employees personally buy outside, which is illegal," Mr. D passionately stated during the interview. However, what truly bothered Mr. D was the project team's unfulfilled promises, "The project team had promised to return the acceleration cards to everyone. It costs 30U for one account, and I got several, but when the promise time came, they just wouldn't return them. When I asked them, they played dead, pure fraud!"
Some investors pointed out that there might be communication issues within the project team regarding decisions. Xiao Tao stated, "The official release of the tokenomics was news to them (project staff) at the same time as us, indicating that the decision-makers did not even discuss with other colleagues; they were autocratic!"
Within 2 days after the TGE, the Xterio official Discord channel was completely flooded with negative community feedback, lacking official staff members to appease the community's emotions until the evening of January 10, when the conflicting emotions began to ease with a new announcement.
It is worth noting that addressing the concerns of investors and the community at large (regarding the 2% airdrop not being implemented), ChainCatcher sent an interview invitation to Xterio on the afternoon of January 10, as of the time of writing, no official response has been received. However, in the evening of January 10 (the same day the interview invitation was sent), Xterio released a new announcement on X specifically addressing Age of Dino players, providing further details on the 2% XTER ecosystem allocation:
· 1% of XTER (10,000,000 tokens) will be distributed to Dinosty (baby dinosaur) NFT holders, with the airdrop based on NFT holdings and a snapshot taken 36 hours after the announcement;
· 1550898 XTER from the Treasury's 777 NFTs will reward users of a new game version to be released in approximately 4 weeks.
· Game rewards: 0.5% (5,000,000 XTER) will be snapshot distributed to Roar holders within 36 hours of this announcement.
· 0.4% (4,000,000XTER) based on your skin collection points and a snapshot taken 36 hours after the announcement.
· 0.1% (1,000,000 XTER) based on in-game power rankings, allocated to the top 200 players. We will gather the top 100 players from Zone 1 and Zone 2 and combine them into an overall ranking.
· Claim period: January 14, 8:00 AM - February 13, 8:00 AM UTC (30 days). Any unclaimed tokens will be directly added to the NFT pool.
Following this announcement, the confrontational emotions of Age of Dino players were largely alleviated. According to ChainCatcher's interviews, most Age of Dino players found the announcement helpful, although it was only "breaking even." Participants of Xterio's other two games, Meet your Anima (Palio) and Overworld Arena, are still in limbo, hoping for restitution—although the pace of the restitution group's expansion has evidently slowed down.
「Let's first see what the situation is with Baby Dino on the 14th before we discuss further,」 a community member said.
「AI tokens will also be distributed on the 14th,」 added Little E.
It's difficult to uncover the true nature of the crisis, but based on Xterio team's response before and after the TGE event, the team did not engage in crisis PR promptly, leading to this trust crisis. Cracks had appeared between the community and the project.
Whale Dong Ruibao's Highly Centralized AOD Suspected of Insider Trading
Many investors told ChainCatcher reporters that the initial reason they were interested in Xterio was because Xterio had a team from FunPlus. FunPlus is a Swiss-based video game developer and publisher known for games such as "King of Avalon," "State of Survival," and "Guns of Glory."
FunPlus provided the technology stack for Xterio. On the other hand, Xterio was a key partner of FunPlus, handling the release and deployment of non-fungible tokens (NFTs) for all current and future FunPlus games.
In 2022, Xterio announced a $40 million fundraising round led by FunPlus, FTX, Makers Fund, XPLA, among others. Upon the investment announcement, Xterio stated that FunPlus provided the technology stack for Xterio and that Xterio, as FunPlus's exclusive partner, would handle the release and deployment of non-fungible tokens (NFTs) for all current and future FunPlus games—clearly illustrating the close relationship between FunPlus and Xterio.
The Xterio website shows that the platform currently hosts several games, including four self-developed games: "Age of Dino," "City Shadows," "Overworld," and "Palio," covering categories such as FPS, MMO, sandbox, and casual games.
Individuals associated with Xterio told ChainCatcher that the core Xterio team is mainly composed of Hong Kong natives, somewhat exclusive, and that only the core team has rights to Tokenshare. Other employees do not have token distribution rights, as these rights are tightly controlled by Dong Ruibao and Ryan Cheung, with Jeremy being mostly sidelined.
「If it were Jeremy, the above would never have been allowed to happen. The Overworld reward of 80U was casually given away with no bottom line,」 the source said.
Who is Jeremy?
Jeremy Horn is the co-founder of Xterio and Overworldplay, previously involved in the creation of Web2 games such as Harry Potter: Hogwarts Mystery, Star Wars: Smuggler's Run, Family Guy: The Quest for Stuff, and Marvel: Avengers Academy, bringing with him rich game development experience.
「Jeremy Horn at least understands tokenomics,」 Xiao Tao commented.
「Although Jeremy may also be flawed, he would at least seek professional advisors to help him design,」 other community members stated.
By the end of 2024, former Chief Strategy Officer of FunPlus and CEO of Qujiayue Entertainment, Dong Ruibao, suddenly announced his departure from FunPlus, taking some of FunPlus's team members with him, and fully dedicating himself to the Web3 startup project Xterio, becoming the actual head of Xterio. He published an article on this matter, which was retweeted by FunPlus's founder and CEO, Zhong Yingwu (Andy), expressing support for Dong Ruibao's entrepreneurial endeavors. Interestingly, around the time Dong Ruibao announced his departure, FunPlus also faced a massive layoff.
The aforementioned Xterio insiders pointed out that on the day of the Token Generation Event (TGE), Dong Ruibao set up a 6 million yuan fund for AOD NFTs, "I suspect this is whitewashing for insider trading because the scores in the main castle are just data."
Several community members expressed doubts to ChainCatcher about potential insider trading in Xterio's self-developed games.
When asked why Dong Ruibao did this and whether there was any behavior of robbing Peter to pay Paul between Web2 and Web3 businesses, the aforementioned Xterio insiders responded that it was unnecessary, stating, "I have seen Dong Ruibao's wallet; he is a whale. He is not short of money and, in fact, does not need financing."
In fact, Dong Ruibao has an illustrious history in Web2. He previously served as the Chief Operating Officer at NetEase, and according to his own recollection, the Fantasy Westward Journey game that he released during his time at NetEase is currently the longest-operating game globally. In addition to his accomplishments in the gaming industry, Dong Ruibao has also ventured into the financial field, with over 7 years of experience in investment banking and asset management, managing close to $100 million in venture capital. Prior to his current roles, Mr. Dong worked at the Softbank China Fund Management Company, Nomura Group, DBS Vickers Securities Investment Banking Department, and served as an auditor at Ernst & Young.
“This is Dong Ruibao,” a related party commented.
“He should never have investigated the event he launched. Not to mention making money, even genuine players lost everything. He should have only looked at those fake data, maybe just to get listed on Binance, but unfortunately, he still didn’t make it.” Xiao Tao said.
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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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