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CZ's Personal Lawyer Responds to "Insider Look into Trump Money Power Pardon Deal"
Original Title: Why Did Trump Pardon Binance Founder CZ?
Original Author: The Pomp Podcast
Original Translation: Azuma, Odaily Star Daily
The following is a text compilation of Teresa's interview, translated by Odaily Star Daily.
Opening
· Pompliano: Hello everyone, today we are going to have a very important and serious conversation. I have invited CZ's personal lawyer, Teresa Goody Guillén, who was deeply involved in the pardon process for CZ. I have seen a lot of controversy online about CZ's pardon, such as how he was released. Does this involve "quid pro quo"? Could it even be corruption? So I contacted Teresa, hoping to discuss face-to-face with her these questions that everyone is concerned about, whether they are simple details or sharp doubts.
What is the Reason for the Pardon?
· Pompliano: First, please tell us, what was CZ accused of? What is the reason for his pardon?
Teresa: CZ was accused of Binance's failure to implement and maintain an anti-money laundering program, compliance system. It needs to be made clear that this is a regulatory violation, a compliance issue, but there was no money laundering involved, just that Binance did not implement an anti-money laundering plan. So, he was pardoned because he should not have been prosecuted in the first place.
In the pardon statement, Trump also said that he does not believe CZ committed any crime and should not have been prosecuted. So, he was pardoned in the name of justice.
CZ is the only one who has been prosecuted or imprisoned for this particular charge or similar nature (characterized by no fraud, no victims, no criminal record, etc.). The unfair treatment he received is very different from that of all others in history.
· Pompliano: Why was he treated unfairly?
Teresa: I believe this is part of the "Cryptocurrency War" initiated by the regulators. At that time, coinciding with the FTX collapse, they needed to take action against someone, they had to sue someone and persecute someone, and unfortunately, CZ became that person.
· Pompliano: If I understand correctly, it's because the company did or did not do certain things that the regulatory agencies targeted them. Is it common for executives to bear personal responsibility for this? On the one hand, I can understand someone saying that the CEO should be held accountable for the company's actions; but on the other hand (I roughly searched on Google), large banks or other financial institutions have also been accused of similar things, but the executives themselves have not been implicated. What is the usual treatment and difference between the company and the executives in these cases?
Teresa: Absolutely correct, executives are never sued for these kinds of things. You can name any large financial institution, and it likely has been accused of the same or even worse misconduct, but we have never seen any CEO being sued. This has never happened, and no other executive has been sued for these specific crimes; this is usually not how the justice system operates.
Unveiling the Pardon Process
· Pompliano: We now know that CZ did indeed receive a pardon, but I have many questions. I see many people speculating about the behind-the-scenes of the pardon... So how was the pardon actually achieved? Is there some form of "quid pro quo"? Is there any corruption involved? I hope you can help us first understand the process of obtaining a pardon, and then we can discuss various speculations within the community.
Teresa: Okay. To obtain a pardon, you must first fill out an application and state the reasons for the application, then a series of people will review these materials and give their opinions. The Department of Justice, pardon lawyers, the Office of the Pardon Attorney, and the White House Counsel’s Office are all involved.
So, before the pardon, there is a substantial amount of legal review that must take place, all of which must be on the application that is submitted. Therefore, this is a relatively standardized process.
· Pompliano: Once you submit the application, who receives the application? Is there a specific Office of Pardon? Is there a designated person in charge? Is the application directly submitted to the President? The President couldn't possibly personally review hundreds or thousands of applications, so who is handling this process?
Teresa: There can be many different ways to process a pardon application, depending on how the pardon application is transmitted, such as whether it is through a dedicated pardon attorney, or through the Department of Justice's website, or through other channels, ultimately to be reviewed by a reviewer.
I know that different people submit pardon applications in different ways, but the President does not personally receive these applications, at least not in the cases I am aware of.
· Pompliano: So, after the application is submitted, someone reviews it and provides recommendations to the President, such as whether this pardon should be considered. Is this a unilateral decision by the President? Or is there a process involving certain individuals (such as staff, administrators, the Department of Justice, etc.) making recommendations?
Teresa: I am not sure about the specific internal operations of the White House, but certainly there are some people who need to sign off, the White House Legal Counsel's office needs to sign off, the pardon attorney needs to sign off. Of course, the ultimate decision lies with the President, and he must sign off personally.
So, this is a collaborative effort involving different people, but I have not been involved in these specific discussions, so I cannot provide more details.
Does Pardon Involve "Quid Pro Quo"?
· Pompliano: There are many speculations surrounding CZ, Binance, World Liberty Financial (WLFI), and Trump, I don't need to repeat all the speculations, you have definitely seen them... So, how would you refute the speculation of "quid pro quo (pay-for-pardon)"? How should people understand the relationship between business transactions and the pardon process?
Teresa: Well... this is actually just a pile of misinformation. When you see those suspicions, have you seen any verified information? You may see some media reports quoting another media report, and then quoting another media report, but these contents have no real basis, only some so-called "sources close to someone," which usually point to an unreliable source.
For example, the media always refers to World Liberty as Trump's company, but I have never seen any evidence. I saw Trump listed as an "honorary member" on their website, saw reports mentioning that certain Trump entities hold a minority stake in the company, but I have not seen any evidence to prove that this is Trump's company.
Some people always take rumors as facts and use them as a basis for assumptions, but the reality is often different. The speculation of so-called "quid pro quo" is based on this premise, but these claims are simply not logical. For example, WLFI's stablecoin USD1 launching on BSC is an open and permissionless act, similar to me listing a product on an e-commerce platform, which does not imply any special relationship between me and the platform owner. This is the reality; assumptions hold no meaning, yet some people make judgments based on these assumptions, which is a clear misunderstanding of how business or blockchain operations function.
There are also accusations regarding Binance, with some saying MGX invested USD1 in Binance, claiming it proves a connection between Binance and WLFI and suggests that Binance and CZ are "bribing" the president. This also reflects a fundamental misunderstanding of how stablecoins operate and the business model. It's like if I buy wheat from you, you pay me in Swiss Francs, and suddenly I'm considered an investor in the Swiss Franc and accused of "bribing" Swiss politicians. It makes no sense, just like the current accusations.
Therefore, these speculations are fundamentally misunderstandings. Many who realize how ridiculous these accusations are do not pay much attention to them. Still, those unfamiliar with the basic operating models continue to perpetuate these claims, causing them to spread further. This is the situation we are currently witnessing.
· Pompliano: I know you are a very accomplished lawyer. I have always wanted to be a lawyer, although I may not be smart enough. Still, I'd like to "test" you a bit. Is USD1 only issued on BSC, or is it also issued on other chains?
Teresa: You're very smart. Indeed, USD1 also exists on other chains. This is another key point; other exchanges also hold USD1, but no one goes around saying that other exchanges are also giving money to the president. Only Binance is facing these rumors and attacks.
· Pompliano: Have CEOs of other cryptocurrency exchanges received pardons from the Trump administration?
Teresa: I believe Arthur Hayes has also received a pardon, he is the CEO of BitMEX. By the way, the pardon mechanism has been in place since the founding of the United States, including during the British period, and covering both individuals and entities for civil and criminal offenses. So, pardons have existed for a long time; it's just that recently there has been more focus on criminal offenses and personal matters. Also, Ross Ulbricht from Silk Road received a pardon.
· Pompliano: Let me go back to the critic's perspective. Some people may think that "there's no smoke without fire." So, is there a payment method where, for example, Trump has a secret Bitcoin wallet, and CZ or Binance has directly transferred money to him? Is there a possibility like this, or is it just a conspiracy theory?
Teresa: I know CZ, so I know this would never happen. He is not that kind of person. I have some knowledge of the president; I don't know him, of course, I would love to know him, but I don't think this is something he would do. I also don't know if he has a Bitcoin wallet, and if he does, that would surprise me.
If such a thing existed, we would have seen relevant reports long ago, and it would have been in a very verifiable and credible manner. This is also one of the beauties of distributed ledger technology—transparency. Since there isn't, it really means it never happened.
CZ's Personal Approach
· Pompliano: I have known CZ for many years. I've always thought he is a very calm, composed, and organized person. I interviewed him earlier this year, and he talked about coming from a village without electricity or running water but eventually becoming one of the richest people in the world. I can't imagine how challenging these experiences were. How does he deal with all of this? This is actually a very important yet often overlooked part of the whole thing—beyond law, politics, facts, and rumors, CZ is also a person; he has a family, emotional issues, how does he cope with all of this?
Teresa: This is another highly impressive aspect of CZ. As his lawyer, my emotions fluctuate more than his because he is so calm and composed, handling everything with ease. I am an optimist myself, but his level of optimism is extraordinary. He always sees the bright side of things, and I admire that I don't know anyone who can handle things as calmly and composedly as he does, and he is always grateful for everything he has.
I'm glad you brought up the topic of CZ's personal side because sometimes when I see people attacking him for certain things, like reading completely baseless reports, it really makes me angry. I believe valuing the humanity of each person is very important. When you attack or slander someone or try to prevent someone from getting forgiveness, remember that person also has a family, and you shouldn't treat them that way.
Two-Tier Fluctuation of Regulatory Attitudes Seen from Politicians' Rhythmic Moves
· Pompliano: I remember Elizabeth Warren (Note: Democratic Senator) had many criticisms of CZ, I remember you (or CZ himself) responded to her at one point saying "the comments were not accurate," but then she responded again, and it became more and more intense, almost like a soap opera... Can you tell us about this scenario? Is it normal for politicians to take action and respond to such things? What exactly happened?
Teresa: First, Warren made a statement on social media saying CZ had been convicted, but in reality, CZ had not been convicted. Warren then accused CZ of inappropriate conduct in obtaining or seeking pardons, further adding to his criminal responsibility. These statements were also inaccurate.
No matter who you are, you cannot casually say someone has committed a certain crime without any basis, or accuse them of multiple uncommitted crimes. Of course, government officials may have some immunity in certain situations, but this immunity should be limited. I hope we can focus more on this point because the immunity these people enjoy is not what our founding fathers hoped for. This is a significant issue, especially when politicians can profoundly impact people's lives and livelihoods through their words, limiting immunity becomes particularly important.
· Pompliano: It feels like this is actually a political issue. Regarding cryptocurrency regulation, in the past few years, we have seen various crackdowns, but the new government now has taken a completely different stance. This political nature is like a pendulum swinging back and forth; do you think we will continue to see this back-and-forth? Should people in the industry expect this kind of fluctuation, or do you think once there is a regulatory tailwind, it will be very difficult to come back with a strong crackdown?
Teresa: Yes, I hope the pendulum does not continue to swing back and forth like this.
I believe that we can now drive some innovation in the United States to make everything more stable. For example, SEC Chairman Paul Atkins hopes to put all markets on the chain, and once they are on-chain, it will be challenging to move them off-chain again.
We should not avoid or try to stop revolutionary technology; it is something we need to embrace. This is not limited to just the financial services sector; it is true for all other application scenarios as well. Once we make progress in this direction, it will be challenging to revert to past technologies.
The Possibility of CZ's Return to Binance
· Pompliano: After CZ's pardon, what changes have occurred at Binance? Will he return to Binance? Is Binance making any business adjustments? I'm not sure how much you know, but what is the current situation at Binance?
Teresa: He will not return to Binance now. Binance is still facing restrictions from the Department of Justice (DOJ), Commodity Futures Trading Commission (CFTC), Department of the Treasury (FinCen), and Office of Foreign Assets Control (OFAC). It's just insane that most companies would only face accountability from one or two government agencies, but Binance is dealing with five, and this is without any fraud, victims, or criminal record.
Binance is still under regulatory constraints. The Treasury Department has arranged for an overseer through FinCen to ensure they comply with U.S. laws—despite Binance being excluded from the U.S. and having no U.S. customers to serve in the first place.
It's good that the accusations against CZ have now been mostly cleared up. Still, this whole situation has damaged both Binance and CZ. However, I believe the biggest loser is the United States, as Binance has yet to return to the U.S. market, resulting in the loss of liquidity from the world's largest cryptocurrency exchange. To become the biggest market, you need the most liquidity—users want more platform choices, and projects want to list on the largest exchanges. But since this exchange is not in the U.S., some people are choosing to launch projects outside the U.S. to get listed on Binance.
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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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