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Ethena 2025 Roadmap: Penetrating Traditional Finance with Customized Product sUSDe
Original Title: Ethena 2025: Convergence
Original Author: G | Ethena, Founder of Ethena
Original Translation: 0xresearcher
In May, I once described the final roadmap of Ethena 2024, elaborating on the vision of the most important product we have created in the crypto space - Internet Money - and using it to drive the fusion of funds and interest rates in DeFi, CeFi, and TradFi.
Looking back, what made us most proud is the resilience we showed during a six-month market downturn. During this time, we encountered many schadenfreude onlookers, but there were also some who stood steadfastly by our side. For this, I am deeply grateful.
I am well aware that choosing to support us in the early days of Ethena was not an easy decision. It required taking on special risks, understanding a brand-new concept, and choosing to trust - believing that we could deliver on our promises.
But this is the essence of innovation, challenging the status quo, and driving industry progress.
Both the team and I appreciate everyone's trust, and we are honored and work tirelessly to build better products to repay your trust.
A few days after the Luna crash, I quit my job, founded Ethena, and assembled the team months after the FTX incident.
We forged ahead during the bear market of 2023 and redoubled our efforts during the market downturn of the past six months, increasing Ethena's core product and ecosystem goals tenfold.
This article will detail our goals for 2025 and will revolve around the following themes:
· 2024 Ethena Key Metrics Summary
· Ethena's Differentiated Products
· sUSDe Entering the Traditional Finance Sector
· Why sUSDe is the Rational Next Development Step for Traditional Finance after ETFs?
· Loose Rate Environment's Macroeconomic Benefit to USDe
· The Current State and Future of the Cryptodollar Landscape
· Ethena Creating a Savings Payment App for One Billion Users on Telegram
· Ethena Network Ecosystem Applications and New Chains
Ethena 2024 Year in Review
· Became the third largest USD asset in the space within ten months, with a supply of $60 billion
· Fastest in history to grow to a $50 billion USD asset
· Last month's annualized revenue exceeded $12 billion
· Second only to pump.fun, becoming the second fastest crypto startup to reach $1 billion in revenue
· In December, became the protocol with the highest per capita revenue in the space
What initially interested me about DeFi protocols was:
· Financial services can scale at marginal cost through software
· Capital can freely flow globally at internet speed
This gave us the ability to create the most profitable entity on Earth, almost for free.
For this purpose, Ethena has only existed for a year.
Comparison of Revenue Run Rate per Employee in December
Ethena is the second fastest startup in history to reach $1 billion in revenue
Ethena officially launched in February 2024. The current supply of USDe is around $60 billion, making it one of the fastest-growing applications in cryptocurrency history. One year after its founding, USDe is only behind USDT and USDC, which have been in operation for nearly a decade.
Fastest in history to reach $50 billion USD asset
In addition to USDT and USDC, Ethena accounted for 85% of all on-chain USD asset growth in 2024. In recent weeks, the nominal USD inflow into USDe has exceeded the total growth of ETFs, all of which are the most successful ETF products in history.
Since October 1st, the inflow of funds into USDe has exceeded all aggregated ETFs of ETH and BTC (excluding IBIT)
In the DeFi space, Ethena has become a key component for other financial applications. Over 50% of Pendle's Total Value Locked (TVL) comes from Ethena; Sky generates around 25% of its revenue (over $1 billion) related to Ethena; Morpho's TVL is approximately 30% from Ethena assets; Ethena's listing on Aave was the fastest-growing asset in 2024, reaching over $1.2 billion within three weeks; most EVM-based perpetual contract exchanges have listed USDe collateral assets.
Ethena is also one of the first on-chain products to enter the CeFi market (primarily used as margin collateral for trading derivatives). USDe is currently listed on about 60% of centralized exchange markets, with only two major exchanges yet to list it. In just a few weeks, USDe surpassed the USDC balance on Bybit, demonstrating the product's alignment with the market.
USDtb was also launched last month, backed by BlackRock's BUIDL Treasury Fund as collateral for the stablecoin. For end-users, the product operates like a regular stablecoin since it is designed specifically for profit-sharing partners such as centralized exchanges, incentivizing them to use the product on their platforms. We will gradually announce exchange integrations in January, allowing these institutions to offer a full suite of dollar products to their users through Ethena's products.
Lastly, we see decentralized and on-chain stablecoins starting to adopt a hybrid approach using USDe and Real-World Asset (RWA) products to support their offerings. Ethena can now provide backend infrastructure to issuers for both products, with products like Sky, Frax, and Usual leveraging Ethena in their offerings.
However, all these achievements pale in comparison to the upcoming changes.
The next phase of Ethena's growth will be primarily driven by entering the traditional finance sector.
The infrastructure is now in place, with the product's regulatory path in the traditional finance sector clear, presenting opportunities far beyond anything we have seen in the cryptocurrency space to date.
Entering Traditional Finance: A Win-Win Integration
Note: The target distribution platforms listed above are for reference only, and not all institutions are current partners.
The fixed income market is the world's largest liquidity investment category, with a total size exceeding $190 trillion. Most asset management firms, sovereign wealth funds, pension funds, and insurance funds invest in fixed income products. The entire cryptocurrency market's market cap is currently less than Australia's debt capital market, despite Australia's population accounting for less than 0.5% of the global population.
The most important financial instrument used worldwide for saving and preserving value is the U.S. dollar and its yield. While this may sound simple, the demand for this product far exceeds the entire cryptocurrency market (including Bitcoin).
That's why, following ETFs, U.S. dollar savings products are the logical next step for these institutions. The futures market is the only market within cryptocurrency that is large enough to meet their dollar demand.
Ethena is prepared to offer such a product.
sUSDe-iUSDe for Traditional Finance
Ethena will launch a new product, iUSDe, next month with the aim of bringing sUSDe into the traditional financial realm through a regulated product.
iUSDe is similar to sUSDe but includes a simple wrapping contract that adds some transfer restrictions at the token level for ease of holding and usage by traditional financial entities.
This includes partnering to provide an independent special purpose vehicle (SPV) managed by regulated investment managers, allowing subscription to shares of this vehicle, enabling traditional financial institutions to effectively participate in the product without exposure to the crypto space.
We will announce the first batch of iUSDe traditional finance distribution partners this month.
The focus for the first quarter of 2025 will be collaborating with traditional finance distribution partners to enable their clients to access iUSDe, covering the entire spectrum:
· Asset Management Firms
· Private Equity Funds
· Exchange-Traded Products
· Private Investment Trusts
· Prime Brokerages
By establishing a bridge to traditional finance, traditional financial institutions can obtain U.S. dollar loans at a spread of SOFR+100-200bps, leading to unprecedented capital inflows into Ethena until the yield spread of the sUSDe protocol narrows with the risk-free rate.
In this scenario, Ethena will play the role of a rate arbitrage tool, facilitating capital flow and rate market convergence between DeFi, CeFi, and traditional finance.
Traditional finance will be able to price iUSDe relative to a risk-free rate, while the supply of USDe will adjust based on changes in the crypto-native rate, serving as a bridge between traditional finance and internet finance.
Based on the current market conditions, we find these pools to have over $10 billion in incremental iUSDe capacity.
The Appeal of iUSDe to Traditional Finance
The uniqueness of Ethena's iUSDe lies in:
· It combines the only two forms capable of achieving real crypto-native yields at a billion-dollar scale.
· Its yield exhibits a weak negative correlation with rates in traditional finance.
· Its underlying assets are held by custodial institutions, which can be underwritten by traditional financial institutions.
By integrating the only two scalable native crypto-yield sources into a dollar product, it provides a simple avenue for capital allocators in traditional finance to access and harvest excess returns from the crypto space through a single asset.
The highest risk-adjusted dollar return in crypto
When Ethena's iUSDe is compared to existing traditional fixed-income portfolios, the unlevered dollar annual return last year was around 20%, which was unheard of before. As rates drop, iUSDe as an alternative will become even more attractive.
sUSDe vs. traditional fixed-income products
The scale of the basis spread in the crypto market is not yet fully understood. Undoubtedly, this is the largest potential source of cash flow in the entire space. Since Ethena's launch, the spread has grown over threefold. Importantly, this scale is sufficient to attract the attention of the traditional financial sector, becoming a viable opportunity.
The total open interest scale reaches $110 billion, with an annualized basis spread of around 20%, enabling Ethena to generate approximately $10 billion in cash flow annually, nearly ten times the cash flow of the entire ETH staking market.
Currently, Ethena holds approximately 7% of the open interest. At a $200,000 Bitcoin price, if only 10% of the open interest is held, USDe's supply would reach $25 billion.
The path forward is now clear, and the task at hand is to execute and deliver this product to the traditional financial market.
With the growth of Bitcoin open interest and market share, USDe's target supply is $25 billion.
Macro Interest Rate Bull Case and Negative Correlation
The most attractive feature of sUSDe to traditional finance is its negative correlation with real interest rates. There are hardly any other debt products in traditional finance that have this feature.
This point is intuitive: as real interest rates continue to decline, speculative activity in the cryptocurrency market accelerates, while the long-term demand for leverage increases, driving funding rates up, ultimately boosting Ethena's harvested yield.
We observed this phenomenon during the zero interest rate policy (ZIRP) period in 2020/21 when the funding rate spread exceeded 15%, and this phenomenon re-emerged in the fourth quarter of 2024.
Rate cuts as a driving force for sUSDe growth
Recently, we have seen the precise response to rate cuts: a cut of approximately 75 basis points caused the funding rate to increase from around 8% to over 20%, a change that occurred over the past few months of the previous quarter. With the arrival of an easing cycle next year, this trend is expected to continue.
Compound Effect of Rate Cuts
Rate cuts have certainly had a compounded effect on Ethena's growth and fundamentals. The rate reduction not only drove the expansion of stablecoin demand but also, as the RWA benchmark rate decreased, from a risk-adjusted standpoint, Ethena became more appealing, able to offset the impact of the decline in real interest rates on traditional fixed-income products.
Simple Example:
For a $1 trillion fixed-income investment portfolio, if the rate decreases by 200 basis points, approximately $150 billion of sUSDe would need to be added to keep the blended portfolio return at the same level.
The Demonstrative Impact of sUSDe on a $100 Billion Fixed Income Portfolio
A higher-risk-adjusted USD yield brought by native crypto assets, this product type has the potential to siphon billions of dollars from the old financial system into the Internet system.
Ethena will act as the bridge for this transition.
By the first quarter of 2025, this transition will take place.
The Future of the Crypto Dollar Landscape
Current Crypto Dollar Landscape
The present and future of the crypto dollar will be drastically different.
Currently, stablecoin use cases can be broadly categorized as follows:
1. Trading and Collateral: Currently dominated by Tether, with the vast majority of spot and perpetual contract pairs priced in USDT with a market size of approximately $125 billion. Ethena, as a derivative collateral asset, has surpassed USDC on the second-largest exchange.
2. Value Savings Tool for Developing Countries: Providing a global USD channel for individuals outside the US banking system, primarily dominated by Tether on the Tron network, with a market size of around $600 billion.
3. Savings or Investment Tool: Currently led by Ethena and Sky, with almost no participation from the traditional financial system in on-chain products, with a market size of about $150 billion.
4. Payment Scenarios: Currently, this market is almost non-existent, although there are instances of PYUSD and USDC, meaningful integration with traditional payment systems has not yet been achieved, with a market size of less than $50 billion.
In conclusion, Tether dominates the current two major application scenarios: trading and the value storage tool for developing countries.
Future Crypto Dollar Landscape
However, I believe that with the entry of the following two categories, the existing landscape will see a significant transformation:
1. Traditional Finance Enters Savings Product Use Case
2. FinTech Companies and Web2 Companies Enter Payment Product Use Case
While the above two categories are currently the smallest in scale, they have the greatest growth opportunities in the future.
Although Ethena has already found product-market fit in the two most popular use cases, I believe that traditional finance entering the savings product and Web2 or FinTech companies entering the payment use case will bring in over $500 billion in net new US dollar inflows to the market in the next two years.
sUSDe will be the primary beneficiary of the former.
As for the latter, we plan to address the payment and savings tool use cases by creating dedicated applications within the Telegram and TON ecosystems, without directly entering into competition in the payment company space.
Product Aimed at One Billion Users
sUSDe Application on Telegram
By 2025, we will launch a dedicated sUSDe use case within the Telegram app, where users can engage in transfers, spending, and savings in an experience similar to that of a mobile digital bank.
Payments will be directly linked to Apple Pay, allowing users to switch between savings assets in sUSDe and direct mobile payments on their phones.
Interest-bearing US dollars are the world's most important savings asset, used for wealth preservation, and I believe it is the only cryptographic product outside of Bitcoin that can reach a billion people.
With Telegram's access to over 9 billion users, we have a distribution platform to bring this product to the world.
Our shared goal is to provide a payment and savings product that is as easy to use as sending a message to one billion people.
Ethena Ecosystem Network
The core product goal of Ethena is simple: with USDe and USDtb, to be the most important product in the cryptocurrency field alongside Tether.
Product and token strategies closely integrated through ecosystem applications
In addition to these core products, Ethena will continue to evolve from a single-asset issuer to a platform, providing support to the best developers and driving on-chain financial innovation.
As part of building an ecosystem based on sUSDe, the design of sENA aims to accrue value through a token model similar to BNB, where applications in the ecosystem will reserve a portion of the token supply to airdrop to sENA holders.
The dollar will continue to serve as the infrastructure for on-chain capital flow, not only used for settlement and payments but also encompassing all core DeFi primitives such as trading, lending, derivatives, and leverage.
Today, every DeFi protocol involving the dollar can be rebuilt around Ethena and achieve an improved economic structure by default.
sUSDe has unlocked new possibilities for this round of innovation, such as fixed-rate lending, leveraged strategies in the money markets, and derivative margin collateral with staking rewards. However, the full picture of new products that could be built based on sUSDe is still worth looking forward to.
The Ethena Network is our plan to directly support innovative protocols based on Ethena's sUSDe applications, while staying aligned with these new protocols through the ENa token.
We have announced two applications:
· Ethereal: a perpetual and spot exchange based on its own application chain, with a full order book denominated in sUSDe and native rewards, where Ethena will provide liquidity and hedge the exchange.
· Derive: the largest on-chain options and structured products protocol, where sUSDe is the system's core collateral asset.
Ethereal will open its testnet next month, while Derive plans to launch its token in the next two weeks.
These are just the first examples in the entire DeFi ecosystem built on sUSDe, with more applications set to be released in the first quarter of 2025.
On-chain detailing will be released alongside the Ethereal mainnet in the first quarter.
Ethena Network Applications
Thank you once again for your support in 2024. Without our users and those who have always believed in our vision, Ethena would be nothing.
2024 was the year we launched our first tangible product, laying the groundwork and preparing for the intersection of a macroeconomic tailwind.
In 2025, we will disrupt the financial system on a scale far beyond what we have achieved so far.
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China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk
Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk
Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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