"Hong Kong asset-backed RWAs not subject to mainland China regulation… mainland-based assets tightly controlled"

Although Chinese authorities recently reaffirmed their ban on virtual assets by releasing a “Notice on Preventing Risks Related to Virtual Assets (Cryptocurrencies),” an interpretation has emerged that real-world assets (RWAs) based on Hong Kong assets are not included in the mainland’s supervisory remit.

According to Caixin, a Chinese business news outlet, a person familiar with the relevant regulations said, “RWAs that use Hong Kong assets as the underlying are not covered by the supervisory scope of the ‘Notice on Preventing Risks Related to Virtual Assets, etc.,’ and do not fall under the jurisdiction of mainland China’s regulators.”

He added, however, that “if RWAs backed by securities or funds within China are issued overseas, the China Securities Regulatory Commission will have jurisdiction.”

Previously, on the 6th, eight government bodies including the People’s Bank of China released the “Notice on Preventing Risks Related to Virtual Assets, etc.,” stating a policy of strictly managing offshore activities related to virtual assets such as RWAs and stablecoins (virtual assets whose value is pegged to fiat currencies).

Caixin also reported that “even immediately after the document was released, some teams at China International Capital Corporation (CICC)’s Hong Kong unit discussed potential business cooperation with major public blockchains and trading platforms,” adding that “some blockchain project stakeholders are also seeking cooperation with investment banks and brokers.” Ant Group and JD.com are also said to be closely watching related policy shifts.