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Multicoin Capital 2025 Vision: DeFi-Native DAOs Explode in Growth; On-Chain Securities Take Flight
Original Article Title: Frontier Ideas For 2025
Original Source: Multicoin Capital
Original Translation: Bitpush News
2025 is expected to be a pivotal year for the crypto industry. The path to the first crypto-supportive regulatory framework, along with the maturation of Layer 1 blockchains, DeFi protocols, DePIN networks, and stablecoins, has created fertile ground for the next wave of frontier innovations.
In keeping with our tradition, we will share the ideas and opportunities that excite us the most for the coming year.
Decentralized Physical Infrastructure Network Robotics (DePIN Robotic) and 0-Employee Companies
—Managing Partner Kyle Samani
DePIN Robotic—Rumors suggest that the incoming Trump administration will push to elevate autonomous driving (AD) regulation from a state level to a national level, creating a unified standard for autonomous driving companies. As GPU clusters continue to scale (e.g., exceeding 100,000 H100 GPUs), AI-based autonomous driving technology using Transformer models will mature further and is poised for widespread real-world applications. Following this, I expect an explosive growth of robot-based DePIN. Many startups have raised funds from non-crypto VCs but have not yet truly commercialized. I am optimistic that many of them will adopt the DePIN model, shifting the risk from the developing company's balance sheet to a global network of robot professionals and "prosumers." Many early adopters of these robotic products will capture crucial data for developing autonomous robots. I know of a company in this space today—Frodobots—that I look forward to seeing more of. Although not a specific robotics company, our portfolio company Hivemapper is exploring many similar ideas.
0-Employee Companies—0-Employee Companies are based on artificial intelligence. With the help of OpenAI's o3 and other more advanced thinking-chain reasoning models, models are reaching a level where they can think, plan, execute, and self-correct. This lays the foundation for AI agents to perform all tasks within a business.
To keep 0-Employee Companies functioning smoothly, they will require human guidance as AI is bound to make mistakes and may exceed its context window. Over time, as AI continuously improves self-correction and expands its context window, I expect the degree of human guidance to decrease. I believe the governance of these 0-Employee Companies may be done through DAOs, and I anticipate that the crypto capital markets will fund ambitious attempts of 0-Employee Companies.
Startups often succeed while large companies fail because they face unique constraints. I believe zero employee constraints will bring some incredible breakthroughs to all business operations.
On-Chain Securities
—Co-founder and Managing Partner Tushar Jain
With the incoming Trump administration and the full Republican sweep in Congress, on-chain securities have finally seen meaningful takeoff.
Transactions on blockchains like Solana can be completed almost instantly, eliminating the common waiting times seen in traditional finance. Faster capital movement increases capital efficiency and should lead to more efficient pricing.
Blockchain ensures that all participants have access to real-time, tamper-proof records of transactions. This level of transparency and security stands in stark contrast to the opaque and sometimes risky centralized databases of traditional financial institutions. Transaction costs on blockchain networks are far lower than traditional banking systems, as evidenced by comparing the cost of sending a stablecoin on Solana ($0.001) versus the cost of a wire transfer ($30). Solana's tokenomics now enable precise granular control of tokenized securities. Issuers can restrict their security holders to whitelist addresses, recall tokens if ordered by a court, and comply with other securities laws or transfer agent requirements or best practices.
Undoubtedly, blockchain's near-instant finality, low-cost transactions, and transparency offer a better settlement than the slow, expensive, and opaque traditional financial rails. The only real obstacle is regulation, and a more innovation-friendly SEC could open the doors to security tokenization.
I don't believe public equities will be the first type of tokenized security widely adopted by the mass market. Less liquid, more opaque markets that benefit more from tokenization are more likely to be adopted first. This could be equity in startups that have no reason to pay Carta or Angelist to manage their cap tables when blockchain can do it for free. It could be fixed income instruments that Figure has been researching for years. It could be LP interests in funds.
Buy Now, Pay Never, Consume Your Portfolio, Portfolio Margin
—Investor Spencer Applebaum
Building on Tushar's idea, we will start to see interesting new products emerge when all assets are programmable and tradable on-chain. Here are a few examples:
Buy Now, Pay Never—Affirm and Klarna have popularized the concept of Buy Now, Pay Later, and I'm sure you've seen these widgets on Amazon and other merchant websites. Today, on-chain users can earn about 8% APY on SOL and about 15% APY on stablecoins. What if users don't need to prepay subscription fees but can instead deposit their tokens with a merchant (from a web2 company like Netflix to a web3 company like Dune Analytics), allowing the merchant to accrue staking/lending rewards over time in exchange for payment? The user's tokens would be locked for a period to ensure payment. We believe there is a strong consumer psychological factor here, where the opportunity cost of yield seems more palatable than upfront payment.
Consume Your Portfolio—When all assets are tokenized and aggregated in one place (a web3 wallet), users should be able to pay for medium to large-ticket items with their portfolio. It makes sense. Imagine Alice has $10,000 in BTC, $10,000 in interest-bearing USDC, $10,000 in TSLA stock, and $10,000 in gold. She wants to buy a $4,000 sofa. Instead of converting her USDC to fiat, waiting for a bank transfer, sending the payment, and then going through the reverse process to rebalance her portfolio, what if she could automatically sell $1,000 of each of her four holdings on-chain and immediately pay the sofa merchant? She remains fully allocated to her existing portfolio without worrying about the rebalancing process.
Portfolio Margining—Within the next 3-5 years, as major crypto brokers and unified super protocols emerge, users should be able to cross-margin all assets. For example, Alice should be able to short BTC perpetual contracts using her AAPL stock and borrow USDC on-chain. Or she should be able to use her tokenized whiskey as collateral to purchase tokenized debt on-chain. We are starting to see this in a holistic manner (e.g., Ostium bringing forex trading on-chain), but everything will become more apparent when spot assets are tokenized.
Validating Off-chain State On-chain
—Venture Partner Shayon Sengupta
Asset ledger systems like Bitcoin and Solana represent a critical step in cryptocurrency evolution. These systems fundamentally deal with money, enabling value storage and transfer on a global scale through permissionless channels. Today, the cryptographic primitives enabling these systems to operate are beginning to cross-pollinate with non-ledger systems, unlocking entirely new markets. In the next 12 months, cryptography will establish itself as a validation layer for data and computation through three novel pathways: network proof, privacy-preserving data processing, and identity/media provenance.
I see it as a fusion of "Monetary Cryptography" and "Validation Cryptography," serving as a coordination layer that will give rise to new economic models and incentive mechanisms.
Emerging Markets: Zero-Knowledge Proofs Unlocking New Possibilities
The first opportunity lies in zkTLS and the market it unlocks. zkTLS refers to constructing zero-knowledge proofs through TLS signatures on a webpage to verify arbitrary data units on the internet in a completely untraceable and tamper-proof manner (e.g., your Equifax credit score or your Strava workout history). Some teams have started deploying zero-knowledge proofs in web sessions to build untraceable and anti-fraudulent applications. Our investments in p2p.me and ZkMe are early examples of this. p2p.me is a cash-in/cash-out platform in India that leverages network proofs to circumvent the region's fragmented market structure. ZkMe is a sovereign identification KYC credential system that allows applications to verify user identity in a privacy-preserving way. The same principle can be extended to dozens of new markets such as ticketing, reservations, and other systems where fraud is the primary bottleneck to liquidity.
Homomorphic Encryption: Unleashing AI Potential
Next, Fully Homomorphic Encryption (FHE) is about to enter its golden age. As AI systems experience diminishing returns from training on public datasets, post-training and fine-tuning in private or secure environments become increasingly critical. This creates a new design space for coordinating datasets that were previously inaccessible as inputs to models, especially as vast amounts of valuable enterprise and consumer data continue to shift from on-premises to cloud systems. Token-based incentive mechanisms will play a key role at this layer, and breakthroughs in this area will elevate top-tier base models.
Identity Verification and Media Attribution: Essential Tools in the AI Era
In the post-AI era where content generation costs approach zero, verifying the authenticity of identities and content will become an indispensable element in consumer applications. Early systems like Worldcoin, Humanity Protocol, and Humancode use cryptographic proofs to authenticate biometric information or government-issued credentials and utilize token incentives as the primary means to mobilize participants at scale. Similarly, standards like C2PA differentiate between authentically captured media and AI-generated media by marking content at the hardware level, but broad adoption of these standards at the application layer may require some form of token-based coordination mechanism to overcome consumer inertia. These tools are crucial for addressing the risks of information saturation on the consumer internet in the AI era.
Transaction Towards Multiplayer, Full-Stack Media Companies
—Investor Eli Qian
Transaction Towards Multiplayer Games—sharing financial gains and losses and engaging in speculation in a collective manner is a behavior rooted in human nature that is highly contagious. People are eager to discuss how much money they've made (or lost!) in various areas such as stocks, sports betting, and even meme coins. However, the currently popular cryptocurrency, stock, and sports betting trading platforms are mostly designed for a single-person experience. Robinhood, FanDuel, BONKBot—none of these prioritize a multiplayer game experience. Nevertheless, the demand for social trading is undeniable. Today, users create their own temporary social experiences through online forums and group chats. A significant portion of the content on Crypto Twitter revolves around these discussions.
One of the biggest advantages of cryptocurrency is permissionless liquidity. It has opened the door for anyone to build multiplayer trading tools for crypto assets. I am very excited to see developers leverage the viral nature of social trading to create multiplayer experiences in 2025. Such products will allow users to share trades, compete on profit and loss tables, and co-own positions with a single click or tap. The design space is vast, including Telegram bots, Twitter Blinks, Discord mini-apps, and more. While 2023 and 2024 witnessed the rise of single-user tools like BONKBot and BullX, 2025 will be the year of the transaction towards multiplayer games.
Full-Stack Media Companies—people have tried many times to use tokens to enhance media and content, but few companies have been able to fully realize their potential. However, we are starting to see the rise of media companies that control end-to-end content creation, including tokens, distribution, and human capital. These "full-stack" media companies have the ability to push the primitives of cryptocurrency further than ever before. For example: athlete tokens, creator tokens, live streams with prediction markets, and more.
One example is Karate Combat. Instead of building the product around existing UFC fighters, they started from scratch to create a new combat league, giving them more control over rules, distribution, and athletes. While the utility of UFC fighter tokens is limited, karate combat allows token holders to vote on training regimens, match attire, or anything else—something that's only possible in the case of karate combat controlling token design and athlete contracts.
Future live streams, sports leagues, podcasts, and reality shows will achieve deep vertical integration in terms of content, distribution, tokens, and human capital. I am very excited about investing in and consuming the next generation of token-enhanced media.
The Rise of the Alpha Hunter
— Investor Vishal Kankani
In 2024, some decisive events took place that foreshadowed interesting new phenomena emerging in 2025.
Firstly, issuing a new token almost costless (around 0 USD) and practically permissionless became a reality. This led to a staggering number of token issuances in 2024, with the majority being meme coins characterized by lifecycles measured in hours, extremely short-lived.
Secondly, the market sentiment in 2024 circled back to a high-throughput, low fully-diluted valuation (FDV) fair launch token issuance model — reminiscent of the Initial Coin Offering (ICO) era of 2017. In this type of market, centralized exchanges (CEXs) struggle to keep up with the pace of new coin listings, a trend we expect to continue into 2025 (as they have their own listing processes), incentivizing a shift towards on-chain trading and providing more liquidity to decentralized exchanges (DEXs). Therefore, DEXs are poised to gain more market share over CEXs in the coming year. With the explosive growth in token numbers and DEX trading activity, active traders will need more robust tools and models to real-time identify emerging tokens, analyze market sentiment and on-chain metrics, spot vulnerabilities, mitigate risks (such as rug pulls), and execute trades efficiently.
This brings us to the third development in 2024: AI agents. Thus far, we have seen AI agents creating content on social media to attract attention to their respective tokens. I anticipate the next iteration of AI agents to be the "Alpha Hunters" — meaning, their sole mission is to seek alpha and autonomously trade in real-time.
The Wave of Crypto Institutionalization
— Partner Matt Shapiro
We are entering the dawn of crypto institutionalization, and this process will unfold at an astounding pace.
Over the past five-plus years, the crypto industry has made significant strides in major technological advancements, product-market fit, and substantial user interface/user experience (UI/UX) improvements. However, the institutional cohort in the cryptocurrency space has essentially remained stagnant. The combination of regulatory and career risks has prevented many financial institutions from effectively entering the space, unable even to offer basic crypto products to their clients. With a pro-crypto administration in the U.S. and the record-breaking success of Bitcoin ETFs, we are about to witness the five-year institutional complacency race to catch up and swiftly find ways to embrace cryptocurrency.
In 2024, there was $350 billion in Bitcoin purchase demand that could not or would not easily be fulfilled through Coinbase. With most asset management firms and large brokerages still not fully onboard with crypto services, by 2025, more funds will be able to flow into the crypto market. We will see a wave of ETF launches to meet and capitalize on this demand. This will not only include ETFs for new crypto assets like Solana (SOL), but also ETFs holding a variety of crypto assets, as well as ETFs combining crypto assets with traditional assets like gold, stocks, or bonds. There will be leveraged ETFs, inverse ETFs, volatility-suppression ETFs, staking ETFs, and more. Essentially, all combinations you can think of to bundle crypto assets for institutional and retail investors will be explored.
We will witness major financial institutions racing to roll out core financial products around cryptocurrency. Every financial institution should explore creating product lines that allow their customers to trade crypto products. Financial institutions should seek to custody crypto assets and provide lending against these assets as they do today for more traditional assets. We may also see a significant increase in stablecoin issuance. Any bank accepting deposits should seek to issue a local stablecoin. I underscored in a conversation with Visa's Cuy Sheffield at the 2024 Multicoin Summit that every company needs a stablecoin strategy. Just as "e-commerce" eventually became integrated into "commerce" back in the day, "stablecoins" will similarly weave their way into various aspects of business, becoming an indispensable part of commercial activities.
These are just the tip of the iceberg. While not the most ambitious technically in the crypto space, the scale, scope, and finances involved in their deployment are massive.
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China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk
Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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