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Behind Russia’s Bitcoin Craze: Crypto Mining in “Shadow Regions”
Original title: The Other Bitcoin Boom: Crypto Mining in Russia’s Shadow Territories
Original author: Neil Barnett, RUSI
Original translation: Felix, PANews
In a world where the Kremlin is increasingly isolated and focused on foreign influence operations, there is a strong incentive to engage in Bitcoin mining for cross-border activities. As the Russian gas market shrinks, the phenomenon of converting excess energy into electricity and then into cryptocurrencies has gradually become popular. Since 2018/19, this has been happening on a large scale in Russia’s “shadow territories” (Transnistria, Donbass and Abkhazia). The use of these legally unclear categories can conceal facts and allow the plunder of the Russian state’s gas and electricity resources. And, as is typical of post-Soviet Russia, private sector actors are conducting covert operations.
How to Turn Cheap Energy into Anonymous Currency
The anonymity of Bitcoin has been questioned by crypto advocates who point out that Bitcoin is traceable and that cryptocurrencies actually offer unprecedented transparency. While this is true to a certain extent, there are several ways to cover one’s tracks for nefarious purposes. These methods include using mixers such as Tornado Cash to obscure on-chain tracing; using a darknet system called “The Onion Router”; or simply purchasing an offline Bitcoin wallet from its owner for a cash premium. Mining new Bitcoins also provides a degree of protection, as there is no history of when the coins were first transferred, so data cannot be provided to investigators.
In order to mine, the Bitcoin network requires computer processing power. Because the system is decentralized, Bitcoin’s designers provide incentives for parties to provide computing power. The incentive is to deliver new Bitcoins to nodes that provide processing power for network transactions. “Bitcoin miners” invest in “mining equipment” (dedicated servers) to perform these calculations and generate new coins.
The key cost variable in Bitcoin mining is the energy required to power these servers, which is one of the reasons why Russia's "shadow territories" are attractive. Research conducted by Nftevening.com in September 2024 showed that "it costs $321,112 to mine Bitcoin in Ireland, while in Iran, miners only pay $1,324, which is more than 240 times cheaper." Even if Bitcoin approaches $100,000, Bitcoin mining will still be uneconomical in many jurisdictions.
Transnistria, Donbass and Abkhazia did not make the list of the 10 cheapest regions for Bitcoin mining, as they are all gray areas beyond the control of sovereign governments. In addition, the methods of obtaining electricity in these regions were not recorded by the survey, which was based on the electricity prices announced by the state. Such research methods are invalid if the cost of electricity is close to zero and the regions in question are not internationally recognized.
Gray Areas
The “shadow territories” of Transnistria, Donbass and Abkhazia (all under the “protection” of Russia) offer special opportunities for Bitcoin mining for those aligned with the Kremlin.
Transnistria: uses energy from the MGRES power station, which is fueled by natural gas provided free of charge by Gazprom. The technopark established to attract miners provides electricity at a price of $0.043 per kilowatt-hour.
Donbass: Has been using electricity from coal-fired power plants since 2021, which in normal times would power heavy industry. Power stolen from the Zaporizhia nuclear power plant may also be used. The Ministry of Human Resources reports that there is a mining center at the Donetsk Metal Plant and at least one more, both of which operate under the protection of the Federal Security Service (FSB).
Abkhazia: Has been using electricity from the Enguri hydropower station on the border with Georgia since 2015/16, as well as imported Russian electricity. The cost of electricity is as low as $0.005 per kWh. However, open source reports show that mining has dropped sharply in Abkhazia and Georgia itself since 2023.
Transnistria: A Perfect Bitcoin Mining Environment
Transnistria’s access to free gas from Gazprom and significant power generation capacity make it an attractive location for Bitcoin mining.
The key factor here is the arrangement between Moldova proper and Transnistria for gas supply and power generation. Both regions receive Gazprom gas via pipeline, and both regions’ gas is billed through Gazprom’s contract with Moldovagas (which is 50% controlled by Gazprom). However, while Moldova pays for the gas, Transnistria’s gas is nominally added to Moldovagas’s debt of approximately $709 million, an amount that has little prospect of being repaid and is controversial.
Since Maia Sandu took office as Moldova’s president in 2021, the country has reduced its reliance on this energy source. But what has not changed is that Transnistria’s natural gas is effectively free and is used to power the 2,500-megawatt MGRES power station. Moldova also relies on MGRES for about 80% of its electricity, illustrating the strange co-dependency between otherwise hostile entities.
This free energy is a subsidy from Moscow to keep Transnistria’s outdated, polluting, and inefficient heavy industries, including chemicals, steel, and cement, running. It also provides very cheap domestic natural gas, helping to consolidate popular support for the local regime.
The scale of this subsidy can be seen in the staggering gas consumption of the two entities: Transnistria (population 300,000) consumes about 2 billion cubic meters per year, while Moldova proper (population 2.5 million) consumes about 1 billion cubic meters per year, according to information provided by the Moldova government. At the delivery point, Transnistria receives about 16 times more gas per capita than Moldova (this figure is offset, however, by the fact that some of Transnistria's gas is used to generate electricity at the MGRES plant and then sold to Moldova). Whether this situation will continue until 2025 is unclear, as Ukraine has refused to renew its gas transit agreement with Gazprom.
Currently, the location offers a near-perfect environment for Bitcoin mining. Given the large power capacity of the MGRES power station and access to free gas, the incentive to engage in Bitcoin mining is obvious. In 2018, the Transnistria region passed legislation that provided a clear legal basis for accelerating the development of cryptocurrency mining.
In 2019, a state-owned mining enterprise zone called "Tehnopark OJSC" was heavily advertised to attract foreign miners, offering electricity at a price of $0.043 per kilowatt-hour. This is a very competitive price; according to BestBrokers.com research, the price of electricity in Kazakhstan in 2024 is $0.073 per kilowatt-hour and in the United States it is $0.127 per kilowatt-hour. Although there is no reliable data at present, the fact that Transnistria receives free gas means that this price may be the cheapest in the world.
According to BestBrokers.com, it currently takes 854,403 kWh of electricity to produce one Bitcoin (a figure that has risen significantly in recent years). Based on the above numbers, this means that electricity costs $36,739 per bitcoin in Transnistria, while Bitcoin costs about $97,000. The corresponding figures for Kazakhstan are $62,371 and for the United States $108,509 (this US figure is a national average; miners may operate in states where electricity is cheaper).
However, since 2019, there have been few further reports and the website is no longer online, although it remains operational until 2022. This does not mean that Bitcoin mining in Transnistria has ceased, but rather reflects that international miners (except Russians) have not flocked to Tiraspol as hoped. Therefore, given the wartime conditions and the need for caution, there is no need for publicity.
Reports by the Moldova NGO Anticoruptie indicate that the main mining players are Goweb International Limited and Tirastel GmbH.
While Western investors are allegedly involved, the “investors” are mainly Russian and connected to Gazprom (benefiting from part of the gas subsidies provided by Gazprom to Transnistria).
Goweb International Limited is an interesting case. Anticoruptie reported that in January 2018, the British Virgin Islands entity Goweb International Ltd spent $8.7 million on crypto mining equipment shipped to Transnistria, with the funds transferred through ABLV Bank in Latvia. The following month, the U.S. Treasury Department’s Financial Crimes Enforcement Network named ABLV as a target of investigation for “institutionalized money laundering” related to “Azerbaijan, Russia, and Ukraine.” ABLV was also at the center of the 2016 “money laundering scandal” in which $1 billion was stolen from Moldova Bank.
Anticoruptie’s report reads:
“Goweb International Limited is an offshore company managed by a group of businessmen from Russia and led by Nikita Morozov, a company specializing in the production and marketing of mining equipment.
The company’s official website shows that it has the largest mining capacity in Moldova, 40 MWh, equivalent to six to eight mining farms.”
With the Russian invasion of Ukraine in February 2022, Moscow’s ability to sell natural gas internationally has weakened, and the Russian state’s motivation to divert natural gas to Bitcoin mining has only increased.
How Bitcoin is Used
There is good reason to believe that “shadow state” Bitcoin mining, while conducted by private sector actors, is run with the support of the Kremlin. In Transnistria, this connection is very clear due to the direct involvement of Igor Chaika, who is nominally the Transnistrian representative of the Russian business organization "Delovaya Rossiya", but is known to be the de facto head of the Federal Security Service in the region.
Chaika is the son of Yuri Chaika, former Russian prosecutor general (2006-2020), who has been closely associated with the Kremlin’s abuses of the justice system. His father currently serves as Putin’s envoy to Ramzan Kadyrov in Chechnya. Meanwhile, his other son, Artyom Chaika, is a businessman who serves as Kadyrov’s adviser on “humanitarian, social and economic affairs” — a role that presumably leaves him plenty of time to pursue other interests.
Chisinau-based Balkan Investigative Reporting Network reported in 2018 that the region was in the early stages of bitcoin mining at the time:
“Chaika subsequently told Russian daily Kommersant that he wanted to move forward with the bitcoin plan. “Now there are the prerequisites for moving forward.” “We agree with the Tiraspol governor that after the law comes into force, the authorities will provide us with the infrastructure for the project. We expect them to make recommendations on where to create the mine.”
Chaika "said he was ready to invest 400 million rubles in cryptocurrency mining in Transnistria," Wired reported.
According to the August 2024 Swiss SECO sanctions against Igor Chaika, he was responsible for financing the destabilizing activities of the Russian Federal Security Service (FSB) in Moldova itself. The Swiss sanctions statement said he worked closely with Dmitry Milyutin, deputy director of the Federal Security Service responsible for Moldova. Furthermore, Chaika was included on the sanctions list alongside Moldovan individuals for their role in destabilizing the country, including Ilan Shor and Vladimir Plahotniuc, with the citation stating:
“Igor Chaika is a Russian businessman responsible for raising funds for Russian Federal Security Service (FSB) projects aimed at destabilizing the Republic of Moldova. He acted as a Russian “treasury”, funneling funds to FSB assets in the Republic of Moldova in order to keep the country under the control of the Kremlin…”
Given Chaika’s role in establishing the Russian-Transnistrian Bitcoin mining collaboration since 2018, it is likely that the resulting Bitcoins were used to destabilize Moldova.
The use of Bitcoin to support Kremlin subversive actions extends far beyond Moldova. For example, a loophole in the United States allows political donations of less than $200 to be anonymous. Large sums can be automatically divided and transferred electronically in the form of smaller donations, while cryptocurrencies add a layer of anonymity. In 2020, for example, the Trump campaign received $378 million this way, while the Biden campaign raised $406 million. There is simply no way for the campaigns themselves or the FEC to determine where the nearly $800 million came from.
In 2018, the U.S. Department of Justice indicted Netyksho and others, alleging they were members or associates of GRU (Russian military intelligence agency) Unit 26165 (better known as "Fancy Bear") and Unit 74455 ("Sandworm"). The indictment named the group responsible for the DCLeaks and Guccifer 2.0 incidents:
“While the conspirators transacted in a variety of currencies, including U.S. dollars, they primarily used Bitcoin to purchase servers, register domain names, and otherwise pay for their hacking activities…
Cryptocurrencies are also effective in evading sanctions and paying for embargoed military equipment. This is especially true when working with partners such as India, where banks are vulnerable to secondary sanctions if discovered. In September 2024, the Financial Times published leaked materials detailing the establishment of an Indo-Russian “closed-circuit” transaction route to evade sanctions:
Poida outlined a five-phase plan to help Russia use the rupee and establish a steady supply of dual-use components. Russia will create a "closed payment system" between Russian and Indian companies, free from Western oversight, "including the use of digital financial assets"...
In November 2024, the US Treasury sanctioned four employees of the Shanghai branch of VTB Shanghai and the New Delhi branch of Sberbank, a move that is likely to be a warning to the banking community. The restrictions are expected to increase the appeal of Bitcoin as a means of settlement because it does not put local banks at risk.
Given this analysis, Bitcoin mining in Russia's "shadow regions" is an undeniable, profitable and virtually anonymous way to turn a lot of power into money. This money can make well-connected Russians rich and allow them to live a wealthy life in places like Dubai and Turkey.
It also poses multiple threats. These threats include destabilizing neighboring countries, exerting covert influence on Western democracies, and working with allies such as India to facilitate sanctions evasion.
As Ukraine’s allies continue their efforts to limit funding and resources for the Kremlin’s illegal war of aggression in Ukraine, combating this mining activity is a key priority that requires a dedicated effort. This could include: cyber warfare measures; blockchain tracing of newly minted tokens to reveal those tied to illicit Russian activity; sanctions on digital asset platforms that facilitate mining; and policies to cut off cheap energy to “shadow regions.” Western restrictions often lag behind Russian circumvention tactics; and when it comes to the vulnerability of Bitcoin mining, the evidence is clear.
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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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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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