SS #73 - China Expands Crypto Crackdown to Stablecoins and Asset Tokenization

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Good morning!

China has introduced a major shift in its regulatory landscape this week. Chinese authorities have officially expanded the country's cryptocurrency prohibitions to include the unauthorized issuance of offshore RMB-linked stablecoins and the tokenization of real-world assets (RWA). In a joint statement, the People’s Bank of China (PBOC) and seven other key agencies declared that any yuan-pegged stablecoin issued without state approval is now illegal. The move specifically targets "digital cash substitutes" that regulators believe could be used to bypass capital controls. By bringing RWA tokenization and offshore stablecoins under direct oversight, the PBOC is signaling a stricter approach to maintaining monetary sovereignty and closing loopholes in the existing financial system.

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In Today's Edition:

• Headline: China Expands Crypto Crackdown to Stablecoins and Asset Tokenization

• Quick Bites: Tether Plans to Add 150 Staff Over Next 18 Months as Expansion Accelerates

• Yield of the Week: 12.03% APY on Avantis

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HEADLINE

State of play: Chinese regulators have officially expanded their cryptocurrency prohibition to include the unauthorized issuance of offshore RMB-linked stablecoins and the tokenization of real-world assets (RWA).

• The People’s Bank of China (PBOC) and seven other agencies declared that any yuan-pegged stablecoin issued without state approval is illegal, targeting potential "digital cash substitutes" that bypass capital controls.

• The notice bans domestic entities from offering RWA tokenization services, such as fractional ownership of property or commodities, effectively criminalizing unregulated on-chain securities.

• The directive explicitly warns that offshore subsidiaries of Chinese firms and foreign entities targeting mainland users will face strict legal scrutiny and enforcement.

What’s Next: Beijing will likely enforce an immediate halt to all RWA experiments while aggressively scaling the digital yuan (e-CNY) to monopolize the nation's programmable payment infrastructure.

Why it Matters: This move secures China’s capital controls by preventing private digital assets from serving as exit ramps for domestic wealth or competing with sovereign monetary policy.

Our Take: By eliminating "digital dollarization" risks, China forces a pivot where Hong Kong remains the only compliant bridge for institutional access to Chinese liquidity.

QUICK BITES

• Tether plans to add 150 staff over next 18 months as expansion accelerates.

• Jefferies says Tether's gold stash tops $23B as buying outpaces nation states.

• Farcaster founders join stablecoin startup Tempo after Neynar acquires social protocol.

• MegaETH Foundation to use USDM stablecoin revenue to fund MEGA token buybacks.

YIELD OF THE WEEK

Avantis LP Vault: 12.03% APY

• Avantis is merging all liquidity into a single, unified vault using the ERC-4626 standard. This move automates the migration for current liquidity providers, requiring no manual action to transition existing positions.

• Vault holders now receive 100% of trading fees. Under this model, yields are driven by organic trading volume rather than trader losses; instead, trader PnL is managed through a separate protocol buffer to help stabilize returns.

• The single-pool structure is designed to improve capital efficiency and composability. Risk management is handled by market-makers maintaining delta neutrality and a buffer system that acts as a first line of defense for LP capital during volatility.

summer.fi USD₮0: 8.58% APY

• The vault is built on the Hyperliquid Network and utilizes a selection of DeFi protocols curated and monitored by BlockAnalitica, an independent risk management team.

• Every protocol integrated into the vault undergoes a vetting process that evaluates security history, historical performance, and the credibility of the underlying development teams.

• Assets are currently deployed across specific Morpho markets, specifically the Felix USDT0 and Morphobeat USDT0 vaults.

IPOR Reservoir wsrUSD looping: 17.39% APY

• The vault offers leveraged exposure to srUSD, a stablecoin backed by a diversified balance sheet of digital strategies and Real World Assets (RWAs).

• Capital is currently deployed within Morpho markets utilizing an effective leverage ratio of 9.5x.

• The vault operates with a 1% management fee and a 10% performance fee on generated returns.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.