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X Space Review | WLD's Biggest Competitor Humanity Protocol to Launch Its Token, Will Identity Authentication Become the New Narrative in the New Year?
On January 3rd, BlockBeats invited Humanity Protocol founder Terence Kwok to discuss the topic "Humanity Protocol to Launch Token: Will Identity Verification Become a New Narrative in the New Year?" and explore the new opportunities for Humanity Protocol, the biggest competitor to WLD.
BlockBeats: Please briefly introduce yourself and the Humanity Protocol project.
Terence Kwok: Hello, everyone. I'm Terence, the founder and CEO of Humanity Protocol. I was born in the United States and grew up in Hong Kong. Prior to this, I founded an internet company, which can be considered a unicorn in the Hong Kong market. A few years ago, during the pandemic, I entered the crypto world and started researching identity verification-related content. Humanity Protocol completed a $30 million financing round in mid-2024, with a valuation of $1 billion. Our testnet went live about two months ago, with over 2 million users participating. We plan to launch the mainnet in the first quarter of 2025 and conduct a TGE.
Over the past year, we have received support from many investors, including Animoca, Shima Capital, Hashed, and Mechanism Capital, and we have also received support from several well-known angel investors.
Since the ICO era in 2017, some have said that blockchain identity verification is a promising track, but no one has truly brought this track to life and developed a product until the emergence of Worldcoin. In fact, this is also a crucial area for the future. Many people compare us to Worldcoin, but in reality, there are significant differences between us, and our visions are also different.
BlockBeats: Could you please introduce the key mechanisms and core technology of Humanity Protocol, such as palm vein scanning, which is quite different from Worldcoin's iris scanning? And what is Proof of Humanity (PoH)?
Terence Kwok: People often compare us to Worldcoin mainly because we use biometric technology for human identity verification. However, from a technical perspective, biometrics come in various forms, including facial recognition and fingerprint recognition. Worldcoin uses iris recognition, while we use palm print and palm vein recognition.
In fact, these biometric technologies are already quite mature. Many people have been researching this technology for the past couple of decades, and many companies have been working in this area. It's just that recently, iris recognition, palm print, and palm vein recognition have been applied in the Web3 domain for identity authentication. In comparing these two technologies, from an accuracy perspective, they are basically similar. However, palm print and palm vein recognition have one advantage: they are not as intimidating or invasive as iris recognition. Scanning one's palm is a more comfortable way for most people.
Currently, even Web2 companies are using this technology. For example, Amazon and Tencent also leverage palm print and palm vein recognition to create some application scenarios. So, this technology is quite mature. Apart from the different biometric methods, our main difference from Worldcoin lies in our different goals. Worldcoin aims to create a Universal Basic Income (UBI) product; they believe that if AI replaces all human jobs, they need to unconditionally give money to the unemployed, which is the idea behind their product. In contrast, our idea is different; we believe that there are already many use cases starting from identity authentication, and UBI is just one of them.
Whether at the Web3 or Web2 level, there are many places that require human identity authentication. In the Web3 domain, many people engage in airdrops and even mining. Many studios can now systematically engage in airdrop hunting, which is not very friendly to project teams. They want to attract users who have a long-term interest in the project. Therefore, from an ideal perspective, human identity authentication is very useful.
At the Web2 level, the current situation we see is that many websites, such as Facebook and Twitter, often require human authentication, such as clicking traffic lights or entering a CAPTCHA to prove that you are human. This is because there are now a large number of bots generating content. Many people do not like to see content created by AI or bots. From a business model perspective, the business model of most Web2 companies is related to advertising. If all the content is fake—actually, about 40%-50% is already fake—then it is not attractive to advertisers.
From the perspective of human proof, I believe that in the current environment, AI or bots are becoming increasingly important. We have built a foundational credential system. Our chain is different from World Chain; we not only provide identity authentication, but we also introduce various validators. Validators could be different universities, different companies, or even banks to verify relevant information. For example, if you graduated from Harvard University or Tsinghua University, these universities can publish your graduation certificate or related information on our system to prove that you indeed graduated from Harvard. If you work at Animoca, then Animoca can issue a certificate on our platform to prove that you have indeed worked at this company. Banks or exchanges can also issue credentials in the system to prove that you have never been sanctioned. In this way, other platforms or applications no longer need to perform their own full KYC.
BlockBeats: What achievements has Humanity Protocol's testnet made since launching in early October?
Terence Kwok: In fact, our testnet is still relatively simple at the moment. About 2 weeks ago, our self-manufactured hardware devices have been shipped out. The first batch consisted of around 10 devices, and we expect to produce several tens more next week. After the Spring Festival, we will ramp up production, with an estimated 2,000 or more devices being put into use.
Our users are distributed in different regions, mainly in Europe. In two weeks, we will allow users to connect their social media accounts to verify their identity information on the testnet. A person has many attributes, with the first and most important attribute being to confirm whether you are human. Other attributes may include workplace, nationality, or online activity level. We will gradually verify these different attributes. Currently, our testnet address is https://testnet.humanity.org/. If you are interested, you can go there to register and experience it.
After registration, you can invite friends to join. When your friends join, you will receive reward coins on the testnet, and after referring others, you will receive additional rewards. We plan to airdrop at the TGE, with the main condition for receiving the airdrop being that you need to scan your palm print or palm vein, or verify other attributes to confirm that you are not a robot.
BlockBeats: Can palm prints or palm veins only be scanned offline?
Terence Kwok: Palm prints can be scanned on the app, while palm vein scanning requires specific hardware devices. We have already set up collection points for palm vein scanning in several cities in Europe. We plan to launch the app in the first quarter of 2025, with palm vein scanning requiring offline scanning. Our goal is to have around 2,000 to 2,500 devices globally distributed in the second quarter, and currently, we have 2,500 devices in production. In comparison, Worldcoin currently operates around 1,000 Orb devices globally.
BlockBeats: Humanity Protocol is about to have its TGE. How does the RWT on the testnet convert to governance tokens? What are the use cases of Humanity Protocol's native token in the ecosystem?
Terence Kwok: I can briefly introduce the basic principle. The more people you recommend and the higher the activity level, the more reward RWT you will receive, and the more governance tokens you can exchange for. At the same time, we have set up mechanisms to prevent users from creating a large number of fake accounts. We do not want the system to be flooded with a large number of bots or fake accounts. One of the use cases of the native token is for paying Gas fees. The native token is also used for verification fees. For example, if you are a developer working on an application and want to verify whether an address or account has passed human identity authentication, you need to pay a fee, which you can do using the native token. This fee will be distributed to different parties. The issuer of the certificate will receive a portion, blockchain validators will get a share, and nodes providing ZK proof will also receive a portion.
BlockBeats: Worldcoin, a competitor of the Humanity Protocol, often encounters restrictions imposed by sovereign states during the development of iris validation due to concerns over national identity protection. How does the Humanity Protocol navigate regulation and handle user information storage?
Terence Kwok: We never store users' original palm or vein pattern information. We encrypt these patterns and convert them into hash values. Then, using ZK proof technology, we compare these hash values. We are unable to access users' raw palm print data, and other credentials follow a similar process. For example, if an institution issues a certificate proving your graduation date, major, and grades, if an application requires this information, user consent must be obtained first. Users can decide whether to provide this information, and all data is encrypted.
We store the encrypted hash values in a decentralized system. The reason for this is that we always give users the right to delete their information. Even though the information is encrypted, users can still choose to delete it if they wish. Worldcoin's biggest mistake is not in collecting user information but rather in not granting users the right to delete their personal information. This is crucial under European law, where users have the right to have their information or data deleted. We have a large legal team to ensure compliance with operations in different countries and regions. Besides compliance, we also ensure the secure protection of user information.
Our team has been researching palm print recognition technology for almost 2 years and has conducted extensive research globally. We have acquired several companies that have focused on biometrics research for over 10 years, providing us with a solid foundation in building data models. Worldcoin, on the other hand, is developing this technology from scratch, with few ventures into iris recognition. Their main issue is that in operation, they not only scan the iris but also take photos, retaining the original images. These iris images are kept for machine learning training purposes. However, they did not disclose this to users, which is their major problem.
BlockBeats: Can you introduce the verification process of the Humanity Protocol?
Terence Kwok: We have a hardware device where you can go to an offline operation point to scan your palm print and palm vein. If you already have a Human ID, you can link your palm print and palm vein to your Human ID. Interestingly, our data is not stored in the cloud but on the hardware device. The data is encrypted and converted into hash values before being uploaded to decentralized storage. If an application needs to verify if an address has been validated, it needs to match a ZK Proofer. In the future, we will have many ZK Proof nodes for verification to ensure information accuracy. Throughout the process, all raw data remains confidential and will never be accessed.
In addition, data encryption and zero-knowledge proof have been applied to the testnet. Now when you register and bind an email on the testnet, we cannot see your email address. Many testnets or platforms will directly store your email address and some other information in the database, but we do not store this information at all. Unless we have the user's permission, we cannot access this information.
BlockBeats: Undoubtedly, AI is the hottest track in 2025. As the unicorn in the privacy track, will Humanity Protocol explore and lay out in the AI data field?
Terence Kwok: We have actually made some progress in the AI field, but I don't want to reveal too many details at the moment. One issue we are focusing on is how to prove who should be responsible for AI as it becomes more powerful. We are also considering releasing a credential to prove that this AI is actually controlled by a certain entity. We are researching and developing these, but we are still in the early stages. Verification can be used not only for humans but also for AI technology. Regarding the combination of data and AI you mentioned, we haven't really considered it yet because the project is still in its early stages. Currently, we need to focus on doing well in biometrics and identity verification. The next step is the credential system, and we will introduce a group of validators to issue credentials to people. I think we should take it one step at a time.
BlockBeats: After the rise of AI technology, digital identity will also rise. How big do you think the market size of human identity verification track, led by palmprint verification, will be?
Terence Kwok: We are the first Web3 project to use palmprint and palm vein for identity verification, but we do not rule out the possibility of adding some new things. Before the TGE, we had already established partnerships with several projects and may use other methods for identity authentication. Actually, what we care most about is the authenticity of the data because it is very easy to falsify data now. For example, finding my photo or video online and using face recognition to fake it is very simple. Voice can also be faked; if you record my voice now, you can later use voice-changing technology to make me say anything. So we believe that offline, hard-to-imitate authentication methods are very important.
Currently, there are blue verification badges on Instagram or X (Twitter), but even if you are a bot, you can get the blue badge. We are currently in discussions and collaborations with some large Web2 platforms. At least Humanity Protocol can prove that a certain account has undergone human identity verification, which is very important. AI is developing rapidly now, and using an AI agent to automatically send messages on Twitter is already a simple thing. Ordinary people actually find it very difficult to distinguish whether the content is written by a machine or a human. Whether from the perspective of content creation or consumption, it is valuable to distinguish the authenticity of the content. This is not to say that machine-produced content has no value; we believe it is important to have the ability to distinguish whether the content is created by a human or a machine.
Advertising and other business models have been affected by fake content, so human authentication is actually very important. We not only focus on human authentication, but also involve authentication in areas such as education, employment, medical records, etc., creating an immutable identity graph where the attributes are definitely true and cannot be easily changed.
BlockBeats: What is the current business model of the Humanity Protocol?
Terence Kwok: The model of Worldcoin is a UBI model, printing its own money and distributing it, and we mainly want to establish a sustainable business model. We have already had quite a few validators coming in one after another, and will announce them before the TGE. These validators can be a university, a company, if they want to prove that a person is a journalist or an employee of a certain company, they can stake tokens to issue credentials. For example, if an institution wants to verify if another person is indeed a BlockBeats journalist, they need to pay a small fee in tokens, which will be distributed to various parties, with BlockBeats receiving a portion of the money, the chain receiving a portion, and the ZK Proof nodes also receiving a portion. This model provides incentives for all participants and helps drive the project forward.
We found that previous blockchain projects focusing on identity verification were too idealistic, as they believed that all credentials should be public and free, which is actually not feasible. We are in talks with some large financial institutions, which can issue credentials to their tens of millions of users, proving that these individuals have passed the institution's KYC and are not sanctioned. This means that in the future, if a DeFi platform wants to ensure its platform is more compliant, it may set up a pool that only accepts people certified by financial institutions to trade, which is an important narrative in the long run. We are gradually cooperating with various institutions and companies to collaborate on this plan, and we have also started developing and promoting SDKs and APIs for use by different developers.
Currently, the authenticity of authentication information has become increasingly important. For example, if I create a profile introducing myself as where I am from, where I studied, and where I have worked, others have no way to know the truth of this information. Similarly, if I send an email from an email address, the recipient also finds it difficult to confirm my identity. Especially with AI and LLMs (Large Language Models) being able to easily mimic various scenarios, the authenticity of authentication information is really crucial.
BlockBeats: Can you please share the upcoming roadmap or development plans for the Humanity Protocol?
Terence Kwok: Our foundation will soon be established, and after its establishment, we are preparing for the TGE. Before the TGE, we will announce some news about our collaborations with Web3 and traditional financial institutions. Recently, we also completed a fundraising round, and this news will be announced soon.
BlockBeats: In the current hot trend of AI technology, how do you think AI and Crypto will be combined? What role will the Humanity Protocol play?
Terence Kwok: This is purely my personal opinion. A few days ago, CoinDesk published an article mentioning that the threshold for launching AI Agent-related meme coins is now very low. My own coding skills are actually very poor. In the current situation, it is similar to the first time using ChatGPT, where everyone thinks the AI Agent is very powerful, but in reality, there is actually no technical threshold to create an AI Agent meme coin. I believe that for AI to continue to develop, it is also inseparable from the advancement of infrastructure. I have also bought some AI Agent coins, but in the long run, it still relies on infrastructure development.
I'll add that many people think Worldcoin is overvalued, but I think it is actually undervalued. For example, if you look at Ripple, it is solving the problem of fund liquidity, but identity verification is actually solving the problem of information liquidity. Especially in the AI era, many people have not yet realized the importance of this issue.
Space Link: https://twitter.com/i/spaces/1YqxovpXzLMJv
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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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