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Shutdown Over = Market Rebound? Review of US Stock, Gold, and BTC Trends After Each Government Restart
Original Title: "End of Shutdown = Market Rebound? A Complete Analysis of the Performance of US Stocks, Gold, and BTC After Previous Government Reopenings"
Original Author: David, Deep Tide TechFlow
At 5 a.m. Beijing Time on November 13, a 43-day government shutdown crisis, setting a historical record in the United States, is about to come to an end.
The U.S. House of Representatives passed a temporary funding bill by a vote of 222-209 on the evening of November 12 local time, which was then signed by Trump.
Thus, the shutdown deadlock that began on October 1 has come to an end.
During these 43 days, there were widespread flight delays, interruption of food aid programs, and suspension of economic data releases, casting uncertainty over all aspects of the world's largest economy.
As the shutdown ends, how will the market react?
For investors in the cryptocurrency market and traditional financial markets, this is not only the conclusion of a political event but also an observation window on how asset prices respond to the "elimination of uncertainty."
Historical data shows that after past major U.S. government shutdowns, U.S. stocks, gold, and Bitcoin have all displayed different trend characteristics.
This time, as the government reopens and federal funding resumes, which assets may benefit?
If you don't have time to read, the following chart can help you quickly grasp the key points.
There is more detail below to help you learn from history and become a savvy investor.
How Does a Shutdown Actually Impact Investments?
To understand the market's response after the shutdown, first, we need to understand: how does a government shutdown actually affect asset prices?
A government shutdown is by no means simply "a vacation for government employees."
According to the Congressional Budget Office's (CBO) estimates, the 35-day shutdown in 2018-2019 resulted in approximately $3 billion in permanent GDP losses and about $8 billion in delayed temporary economic activity.
This 43-day shutdown has broken historical records. Although the CBO has not yet released an economic impact assessment of this shutdown, considering its longer duration and wider impact, the economic losses are likely to significantly exceed those of 2018-2019.
Tangible economic activity reduction will be reflected in key indicators such as GDP growth rate, consumption data, and corporate profits.
But more important than the economic loss is the uncertainty itself.
One of the core logics of the financial markets is: Investors abhor uncertainty.
When the future is unpredictable, funds tend to divest high-risk assets (tech stocks, growth stocks), increase holdings of safe-haven assets (gold, U.S. bonds, etc.), reduce leverage, and hold cash to wait and observe.
So, what happens when the shutdown ends? In theory, the end of a shutdown signifies:
Policy certainty returns - At least for the next few months, government funding is secured Economic data resumes publication - Investors regain tools to assess economic fundamentals Fiscal spending restarts - Delayed procurement, wages, benefits payments begin, providing a short-term boost to the economy Risk appetite restores - The worst-case scenario is averted, funds start chasing returns
This usually triggers a "relief rally" because the elimination of uncertainty itself is a positive.
It is worth noting that this kind of rebound may not be long-lasting.
After the shutdown, the market will quickly return to focusing on economic fundamentals; therefore, we believe the impact of the shutdown on the market can be divided into two levels:
· Short-term (1-2 weeks): Emotion recovery due to uncertainty elimination usually favoring risk assets
· Mid-term (1-3 months): Depending on whether economic fundamentals are actually damaged and other macro factors
For the crypto market, there is also a special consideration: the resumption of regulatory agency operations.
Regulatory agencies like the SEC, CFTC, etc., were basically stalled during the shutdown, with approval processes paused and enforcement actions delayed. When the government reopens, how these agencies will "catch up" is also a variable worth watching.
Next, let's look at historical data to see the actual performance of the U.S. stock market, gold, and Bitcoin after several major shutdowns in the past.
U.S. Stock Market Historical Review: There is Always a "Relief Rally" after the Shutdown Ends
Let's focus on three extended government shutdown events that had a significant impact on the market and see how investors responded with real money in the U.S. stock market when the government reopened.
You can see:
1. December 1995 Shutdown (21 Days): On the Eve of the Tech Bubble, Mild Rise
On December 16, 1995, the Clinton administration and the Republican-controlled Congress reached a stalemate over a balanced budget plan, leading to a government shutdown.
Market Performance:
· 1 Month Later: S&P 500 rose to 656.07 (+6.1%), Nasdaq 1093.17 (+5.9%), Dow Jones 5539.45 (+6.6%);
· 3 Months Later: S&P 500 reported 644.24 (+4.2%), Nasdaq 1105.66 (+7.1%), Dow Jones 5594.37 (+7.6%);
This was more like a typical rise and then correction pattern. One month after the shutdown, all three major indices recorded around a 6% rebound, but the gains narrowed by the 3-month mark, with the S&P 500 even retracing from its 1-month high.
Though it was a long time ago, considering the political and economic environment at the time, the reason behind this could be that the market, after digesting the short-term positive impact of the shutdown resolution, returned to fundamental pricing.
The beginning of 1996 marked the start of the U.S. economic "Golden Age," with the emergence of personal computers and the internet in their infancy, tech development on the rise, mild inflation, and the market itself in a long-term uptrend, making the shutdown disturbance more of a side note.
2. October 2013 Shutdown (16 Days): U.S. Stocks Hit Pre-Financial Crisis High
On October 1, 2013, the Republicans attempted to use a shutdown to force a delay in the implementation of the Affordable Care Act by the Obama administration, resulting in another government shutdown. This shutdown lasted for 16 days, reaching an agreement only in the early hours of October 17.
Market Performance:
· 1 Month Later: S&P 500 rose to 1791.53 (+3.4%), Nasdaq 3949.07 (+2.2%), Dow Jones 15976.02 (+3.9%)
· 3 months later: S&P 500 reported 1838.7 (+6.1%), Nasdaq 4218.69 (+9.2%), Dow Jones 16417.01 (+6.8%)
This shutdown occurred at a special historical moment: October 2013 was the time when the U.S. stock market emerged from the shadow of the financial crisis and surpassed the 2007 high.
The end of the shutdown coincided almost simultaneously with a technical breakthrough, coupled with the QE3 quantitative easing implemented by the Federal Reserve at the time, and the market sentiment was extremely optimistic. Nasdaq saw an almost 10% increase within 3 months, significantly outperforming traditional blue-chip stocks, with tech stocks once again leading the rebound.
3. December 2018 Shutdown (35 Days): Bear Market Bottom Reversal, Strongest Shutdown Rebound
On December 22, 2018, Trump insisted on $5.7 billion for the U.S.-Mexico border wall fund, leading to a deadlock with the Democratic Party. This standoff persisted until January 25, 2019, setting the then-record for the longest shutdown in history (35 days), only to be surpassed by the current 42-day shutdown.
Market Performance:
· 1 month later: S&P 500 rose to 2796.11 (+4.9%), Nasdaq 7554.46 (+5.4%), Dow Jones 26091.95 (+5.5%)
· 3 months later: S&P 500 reported 2926.17 (+9.8%), Nasdaq 8102.01 (+13.1%), Dow Jones 26597.05 (+7.5%)
This was the strongest rebound of the three shutdowns, with special reasons behind it.
In the fourth quarter of 2018, U.S. stocks plummeted nearly 20% from their highs due to Fed rate hikes and trade tensions, hitting a temporary low on December 24.
The end of the shutdown almost synchronized with the market bottom, coupled with the Fed's subsequent policy shift to pause rate hikes, a double positive that likely drove a strong rebound.
Nasdaq's 13% increase in 3 months once again confirmed the high resilience of tech stocks in a risk appetite recovery phase.
Looking back at the historical data of U.S. stocks after a shutdown, three clear patterns emerge:
First, a short-term rebound is a high-probability event. In the month following the end of the three shutdowns, all three major indices without exception rose, with gains ranging from 2% to 7%. The elimination of uncertainty is itself a positive factor.
Secondly, tech stocks often outperform the market. The Nasdaq saw gains of 7.1%, 9.2%, and 13.1% over a 3-month period, significantly higher than the Dow Jones' 7.6%, 6.8%, and 7.5%.
Thirdly, the mid-term trend depends on the macro environment. There is a significant performance difference in the 1-3 months after the shutdown. Years such as 1996 with an initial rise followed by a correction, 2013 with a sustained rally, and 2019 with a strong rebound all had their own macro logic behind them, rather than the shutdown itself.
Gold Historical Review: Trends Not Solely Determined by the Shutdown
When we shift our focus to gold, we find a story that is quite different from the stock market.
1. December 1995 Shutdown (21 Days): Minor Volatility
Gold Price Performance:
· End of Shutdown (January 1996): $399.45 per ounce
· 1 Month Later (February 1996): $404.76 (+1.3%)
· 3 Months Later (April 1996): $392.85 (-1.7%)
The impact of this political event on the price of gold was minimal.
2. October 2013 Shutdown (16 Days): Continued Pullback
Gold Price Performance:
· End of Shutdown (October 2013): $1320 per ounce
· 1 Month Later (November 2013): $1280 (-3.0%)
· 3 Months Later (January 2014): $1240 (-6.1%)
This was the weakest performance of gold among the three shutdowns. 2013 was a bearish year for gold, falling from $1700 at the beginning of the year to $1200 at the end, with an annual decline of over 25%.
The reason behind this was the Fed starting to discuss tapering quantitative easing, leading to a stronger dollar that suppressed the gold price. After the shutdown ended, as uncertainty faded, gold's safe-haven status further weakened, accelerating the price decline.
3. December 2018 Shutdown (35 Days): Initial Rise Followed by Retracement
Gold Price Performance:
· End of Shutdown (January 2019): $1290 per ounce
· 1 Month Later (February 2019): $1320 (+2.3%)
· 3 Months Later (April 2019): $1290 (0%)
During this shutdown, the US stock market experienced a sharp decline at the end of 2018, leading to a surge in safe-haven demand, driving the gold price up from $1230 to $1290. After the shutdown ended, the gold price briefly peaked at $1320. However, as the stock market rebounded and risk appetite increased, the gold price fell back to the level at the end of the shutdown, resulting in no net change over 3 months.
In the 2013 and 1996 shutdowns, the stock market rose by 3-6% after the shutdown ended, while gold either declined (2013: -6.1%) or traded sideways (1996: -1.7%).
This also aligns with the subjective perception that when uncertainty is eliminated and risk appetite returns, funds flow from safe-haven assets to risk assets.
If history repeats itself, after this 42-day shutdown, gold may face the following two scenarios:
Scenario One: Rapid Ebbing of Safe-Haven Demand. If the gold price has already risen during the shutdown due to safe-haven demand, the end of the shutdown may trigger profit-taking, causing a short-term pullback of 5-10%. This was most evident in the 2013 case.
Scenario Two: Unresolved Macroeconomic Risks. If the shutdown is over but macro concerns such as US fiscal issues, debt ceiling, economic recession risks persist, gold may remain strong or even continue to rise.
After all, the shutdown is only temporary.
From the current gold price perspective, the end of the shutdown may alleviate short-term safe-haven demand but is unlikely to change gold's long-term uptrend.
BTC Historical Retrospective: Limited Sample Size, Yet Revealing Insights
Finally, we come to the question that concerns crypto investors the most: How will Bitcoin perform after the shutdown?
Frankly, historical samples are extremely limited. Bitcoin did not exist during the 1996 shutdown, and in 2013, when there was a shutdown, Bitcoin's market cap was too small and it was in the midst of a super bull market. Therefore, the only truly relevant reference point is the shutdown of 2018-2019.
1. October 2013 Shutdown (16 days): Bull Market Interlude, Not Closely Related to the Shutdown
BTC Price Performance:
· End of Shutdown (2013-10-17): $142.41
· 1 Month Later: $440.95 (+209.6%)
· 3 Months Later: $834.48 (+485.9%)
This data looks extremely exaggerated, tripling in one month and nearly sextupling in three months.
2013 was one of the most insane bull market years in Bitcoin's history, with a skyrocketing over 5000% for the year, soaring from $13 at the beginning of the year to a peak of $1,147 by year-end.
October was right in the midst of this super bull market acceleration. BTC had just experienced a crash due to the FBI's seizure of the Silk Road, but the market quickly rebounded from brief panic to enter the craziest euphoric phase.
However, this shutdown had almost no causal relationship with BTC's trend. In Bitcoin's price logic, the government shutdown was more like a noise-level event.
2. December 2018 Shutdown (35 days): Bear Market Bottom, Key Turning Point
BTC Price Performance:
· End of Shutdown (2019-01-25): $3607.39
· 1 Month Later: $3807 (+5.5%)
· 3 Months Later: $5466.52 (+51.5%)
In December 2018, BTC was at the bottom of a prolonged bear market. From its high of $19,000 in December 2017, BTC had plummeted over 80%, hitting a temporary low of $3,122 on December 15, 2018. The start of the shutdown (December 22) was almost synchronous with BTC's bottoming out.
Within the first month after the shutdown ended, BTC only mildly rebounded by 5.5%, a gain far below the stock market's 4.9-5.5%;
But by the end of 3 months, BTC had surged by 51.5%, significantly outperforming the S&P 500's 9.8% and the Nasdaq's 13.1%.
There are several key factors behind this:
First, the bottom-reversal logic of BTC itself. In early 2019, the crypto market began to see a consensus that the "worst times were over": miners capitulated, retail investors exited, but institutions started to enter.
Second, an improvement in the macro environment. The Fed sent a dovish signal in early 2019, global liquidity expectations improved, which was positive for the high-risk asset BTC.
Third, BTC's market cap at the time was around $60 billion, much smaller than the stock market, with lower liquidity, hence higher volatility. When risk appetite rebounded, BTC's resilience naturally became stronger.
Comparing the performance with gold and the stock market, Bitcoin shows more of a macro Beta + its own cycle overlay result.
In the short term, BTC behaves like a high Beta risk asset.
After the shutdown, when uncertainty is removed and risk appetite recovers, BTC's rebound (12%) is close to Nasdaq's (5.4%) and far exceeds gold's (2.3%). This indicates that in a 1-3 month timeframe, BTC's pricing logic is closer to that of tech stocks rather than safe-haven assets.
However, in the medium to long term, BTC has its own cycle. After BTC rose to $5,200 in April 2019, it continued to rise to $13,800 in June, far exceeding any traditional asset. The core driver of this rally may come from the upcoming four-year halving cycle, with institutions and large companies entering the space.
Whether the government shuts down or not, the impact is minimal.
Looking ahead, if this 42-day shutdown ends, how will BTC react?
Short term (1-2 weeks): If the end of the shutdown triggers a "relief rally" in the U.S. stock market, BTC is likely to follow suit;
Medium term (1-3 months): It all depends on the macro environment. If the Fed remains accommodative, economic data remains decent, and there are no new political crises, BTC may continue its rally.
But don't forget, the crypto market currently lacks a breakthrough narrative, so expecting BTC's price to be primarily driven by internal factors is unlikely.
Shutdown Ends, Game Continues
The 42-day shutdown is about to end, but this is not the end; it's the beginning of a new round of market changes.
Looking back at history, the market usually experiences a short-term rebound after a shutdown ends. However, the sustainability of this rebound needs to be viewed rationally.
When you see the market rise by 5% after a halt, don't be quick to FOMO; when you see BTC experience a short-term pullback, don't panic sell either.
Stay rational, focus on the fundamentals, manage risk properly, and principles will not change just because of a halt.
Events can turn the page, but the game will continue.
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China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk
Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk
Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:
To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:
Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:
(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.
The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.
A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.
（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.
Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.
(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.
The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.
(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.
(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.
(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.
(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.
(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.
（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.
（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.
（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.
（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.
（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.
（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.
(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.
(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.
(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.
(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.
(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.
This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.
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