Chinese regulators have intensified their scrutiny of virtual currencies, issuing a warning on December 5 against illegal activities in the sector. This follows a joint crackdown by 13 government departments on November 28. The warning, issued by seven key associations, highlights the risks associated with virtual currencies and casts uncertainty over the future of real-world asset tokenization (RWA) in China. Legal experts caution that public tokenization efforts could be deemed illegal fundraising or unauthorized securities, as no regulatory approvals have been granted for such initiatives. Financial institutions in China are prohibited from supporting these activities. While offshore markets like Hong Kong and Singapore might offer alternatives, compliance with regulations such as Countering the Financing of Terrorism remains a significant challenge. Chinese entities looking to move assets abroad must navigate these legal complexities carefully.