China has banned most yuan-pegged stablecoins and the tokenization of real-world assets (RWAs), according to a recent announcement by the People's Bank of China and other major regulators. The new regulations prohibit the domestic circulation of these digital assets and impose strict penalties on firms providing intermediary services to overseas crypto entities. Analysts suggest this move will significantly impact global cryptocurrency industries by cutting off overseas issuance channels linked to China. Despite the broad ban, the regulations leave room for potential government-approved RWA projects. Analysts are divided on whether this indicates a regulatory sandbox for select projects in Hong Kong. The guidelines provide a narrow compliance path for high-quality projects aligned with national policies, signaling a cautious yet strategic approach to managing market risks.