a16z: How to Phased Approach Secure and Efficient zkVM Implementation (A Must-Read for Developers)

By: blockbeats|2025/03/12 20:15:02

Original Title: The path to secure and efficient zkVMs: How to track progress

Original Author: a16z crypto

Original Translation: Golem, Odaily Planet Daily Golem

zkVM (zero-knowledge Virtual Machine) promises to "make SNARKs mainstream," allowing anyone (even without specialized SNARK expertise) to prove that they have correctly executed any program on a given input (or witness). Their core advantage lies in developer experience, but currently they face significant challenges in security and performance. To fulfill zkVM's vision, designers must overcome these challenges. In this article, I outline the possible stages of zkVM development, which will take several years to complete.

Challenges

In terms of security, zkVM is a highly complex software project still riddled with vulnerabilities. In terms of performance, the speed of proving program correctness can be orders of magnitude slower than native execution, making it impractical for most applications to deploy in the real world.

Despite these real-world challenges, most companies in the blockchain industry portray zkVM as ready for immediate deployment. In fact, some projects have already paid significant computational costs to generate proofs of on-chain activity. However, because zkVM is still imperfect, this is merely a costly way of pretending the system is SNARK-protected when, in reality, it is either protected by permission or, worse, vulnerable to attacks.

We are still several years away from achieving a secure and high-performance zkVM. This article proposes a series of phased specific goals to track the progress of zkVM—goals that can eliminate hype and help the community focus on real advancement.

Security Stage

SNARK-based zkVMs typically include two main components:

· Polynomial Interactive Oracle Proof (PIOP): Used to prove statements about polynomials (or constraints derived from them) in an interactive proof framework.

· Polynomial Commitment Scheme (PCS): Ensures that the prover cannot lie about polynomial evaluations without being caught.

zkVM fundamentally transforms efficient execution into a constraint system—broadly meaning that it enforces the virtual machine to correctly use registers and memory—then applies SNARKs to prove that these constraints are satisfied.

Ensuring that complex systems like zkVM are error-free is done through formal verification. Below is a breakdown of the security phases. Phase 1 focuses on the correct protocol, while Phase 2 and Phase 3 focus on the correct implementation.

Security Phase 1: Correct Protocol

1. Formal verification proof of PIOP reliability;

2. Formal verification proof that PCS has efficacy under certain cryptographic assumptions or ideal models;

3. If using Fiat-Shamir, a concise argument obtained by combining PIOP and PCS is secure in the random oracle model formal verification proof (enhanced with other cryptographic assumptions as needed);

4. Formal verification proof that the constraint system employed by PIOP is equivalent to the VM's semantics;

5. Binding all the above parts into a unified, formally verified secure SNARK proof for executing any program specified by the VM bytecode. If the protocol aims for zero-knowledge properties, this attribute must also be formally verified to prevent leakage of sensitive information about witnesses.

Recursive Alert: If zkVM employs recursion, every PIOP, commitment scheme, and constraint system involved anywhere in the recursion must be verified to consider this phase complete.

Security Phase 2: Correct Validator Implementation

Formally verify the implementation of zkVM's validator (using Rust, Solidity, etc.) matches the protocol validated in Phase 1. Achieving this ensures that the implemented protocol is sound (not just a paper design or an inefficient specification written in Lean, for example).

There are two reasons why Phase 2 concerns solely the validator implementation (not the prover). First, ensuring the correct usage of the validator is sufficient to guarantee reliability (i.e., ensuring the validator cannot trust any false statements to be true). Second, the implementation of the zkVM validator is over an order of magnitude simpler than the prover's implementation.

Security Phase 3: Correct Prover Implementation

The actual implementation of the zkVM Prover correctly generates the proof system for Phase 1 and Phase 2 verification, i.e., achieves formal verification. This ensures completeness, meaning that any system using zkVM will not be "stuck" with unprovable statements. If the Prover intends to achieve zero-knowledge, this property must be formally verified.

Expected Timeline

· Phase 1 Progress: We can expect incremental progress next year (e.g., ZKLib). However, it will take at least two years before any zkVM can fully meet the requirements of Phase 1;

· Phase 2 and Phase 3: These phases can progress alongside some aspects of Phase 1. For example, some teams have already demonstrated that the Plonk Prover's implementation matches the protocol in the paper (although the protocol in the paper itself may not be fully validated). Nevertheless, I expect that no zkVM will reach Phase 3 in less than four years—and possibly longer.

Key Points: Fiat-Shamir Security and Verified Bytecode

A major complicating factor is the unresolved research issues surrounding the security of the Fiat-Shamir transformation. All three phases treat Fiat-Shamir and the random oracle as part of their bulletproof security, but in reality, the entire paradigm may have vulnerabilities. This is due to an over-idealization of the random oracle and differences with practical hash functions. In the worst case, a system that has reached Phase 2 could later be found to be entirely insecure due to Fiat-Shamir issues. This has raised serious concerns and ongoing research. We might need to modify the transformation itself to better mitigate such vulnerabilities.

Non-recursive systems are theoretically more robust because certain known attacks involve circuits similar to those used in recursive proofs.

Another point to note is that if the bytecode itself is flawed, then even if the proof of correct execution of a computer program (specified through bytecode) has run successfully, its value is limited. Therefore, the practicality of zkVM largely depends on the method of generating formally verified bytecode—a significant challenge beyond the scope of this article.

Regarding Post-Quantum Security

At least for the next five years (possibly longer), quantum computing will not pose a serious threat, while vulnerabilities present a survival risk. Thus, the primary focus now should be on meeting the security and performance stages discussed in this article. If we can achieve these security requirements more quickly with non-quantum-secure SNARKs, then we should do so until post-quantum SNARKs catch up or serious concerns about cryptographically relevant quantum computing arise for consideration.

zkVM Performance Status

Currently, the zkVM prover's overhead factor is close to 1,000,000 times the native execution cost. If a program takes X cycles to run, the cost to prove correct execution is approximately X multiplied by 1,000,000 CPU cycles. This was the case a year ago, and remains so today.

Popular narratives typically describe this overhead in a way that sounds acceptable. For example:

· "The cost to generate a proof for all Ethereum mainnet transactions in a year is less than one million dollars."

· "We can almost generate Ethereum block proofs in real time using a cluster of tens of GPUs."

· "Our latest zkVM is 1,000 times faster than its predecessor."

While technically accurate, these statements can be misleading without proper context. For example:

· It is 1,000 times faster than the old version of zkVM, but the absolute speed is still very slow. This more reflects how bad things were rather than how good they are.

· There have been proposals to increase the computational load on the Ethereum mainnet by a factor of 10. This would make the current zkVM performance slower.

· What is referred to as "near real-time proof of Ethereum blocks" is still much slower than what many blockchain applications require (for example, Optmism has a block time of 2 seconds, much faster than Ethereum's 12-second block time).

· "A cluster of tens of GPUs always running flawlessly" cannot achieve an acceptable liveness guarantee.

· Spending less than one million dollars per year to prove all activity on the Ethereum mainnet reflects the fact that an Ethereum full node only needs to spend about $25 per year to perform computation.

For applications outside of blockchain, such overhead is clearly too high. No amount of parallelization or engineering can offset such enormous overhead. We should take as a basic benchmark that zkVM's slowdown compared to native execution does not exceed 100,000 times—even if this is just the first step. True mainstream adoption may require overhead closer to 10,000 times or lower.

Measuring Performance

SNARK performance has three main components:

· Underlying proof system's intrinsic efficiency.

· Application-specific optimizations (e.g., precompilation).

· Engineering and hardware acceleration (e.g., GPU, FPGA, or multi-core CPU).

While the latter two are crucial for real-world deployment, they typically apply to any proof system, so they may not necessarily reflect the underlying overhead. For example, adding GPU acceleration and precompilation in zkEVM can easily achieve a 50x speedup, much faster than a purely CPU-based approach without precompilation—enough to make an inherently less efficient system appear superior to one that has not been similarly polished.

Therefore, the focus below is on the performance of SNARK without specialized hardware and precompilation. This is different from the current benchmarking approach, which often lumps all three factors into a single "headline number." This is akin to judging the value of a diamond based on its polishing time rather than its inherent clarity. Our aim is to eliminate the intrinsic overhead of a generic proof system—helping the community eliminate confounding variables and focus on true progress in proof system design.

Performance Phases

Here are 5 milestones of performance achievement. First, we need to reduce the verifier's overhead on the CPU by several orders of magnitude. Only then should the focus shift to further reductions through hardware. Memory usage also needs to increase.

Across all stages below, developers should not have to implement custom code specific to zkVM to achieve the necessary performance. Developer experience is a key advantage of zkVM. Sacrificing DevEx to meet performance benchmarks would contradict the essence of zkVM itself.

These metrics focus on the prover's cost. However, if unlimited verifier cost is allowed (i.e., no bounds on proof size or verification time), any prover metric can be easily achieved. Therefore, for systems to adhere to the stages described, maximum values for proof size and verification time must be specified.

Performance Requirements

Phase 1 Requirement: "Reasonable and Nontrivial Verification Cost":

· Proof Size: The proof size must be smaller than the witness size.

· Verification Time: The speed of verifying the proof must not be slower than running the program natively (i.e., performing the computation without a correctness proof).

These are the minimal and succinct requirements. They ensure that the proof size and verification time are not worse than simply sending the witness to the verifier and having the verifier directly check its correctness.

Requirements for Phase 2 and Beyond:

· Maximum Proof Size: 256 KB.

· Maximum Verification Time: 16 milliseconds.

These cutoff values are intentionally set high to accommodate new fast proof technologies that may bring higher verification costs. At the same time, they exclude very expensive proofs that few projects would be willing to include on the blockchain.

Speed Phase 1

A single-thread proof must be at most 100,000 times slower than native execution, measured across a range of applications (not just proofs of Ethereum blocks) and not relying on precompiles.

Specifically, think of a RISC-V process running at about 30 billion cycles per second on a modern laptop. Achieving Phase 1 means you can prove at a rate of approximately 30,000 RISC-V cycles per second on the same laptop (single-threaded). However, the verification cost must be as mentioned above, "reasonable yet non-trivial."

Speed Phase 2

A single-thread proof must be at most 10,000 times slower than native execution.

Alternatively, due to some promising SNARK techniques (especially those based on binary fields) being hindered by current CPUs and GPUs, you can reach this stage by comparing against using an FPGA (or even an ASIC):

The number of RISC-V cores an FPGA can simulate natively;

The number of FPGAs required to simulate and prove (near-) real-time execution of RISC-V.

If the latter is at most 10,000 times more than the former, you qualify for Phase 2. On a standard CPU, the proof size must be at most 256 KB, and the validator time must be at most 16 milliseconds.

Speed Phase 3

In addition to achieving Speed Phase 2, you can also use automatically synthesized and formally verified precompiled implementations with proof costs of less than 1,000 times (suitable for a wide range of applications). Essentially, you can customize an instruction set dynamically for each program to accelerate the proof, but it needs to be done in an easy-to-use and formally verified manner.

Memory Phase 1

The speed in Phase 1 is achieved with the prover requiring less than 2 GB of memory (while also achieving zero-knowledge).

This is crucial for many mobile devices or browsers, opening up countless client-side zkVM use cases. Client-side proofs are important because our phones are our ongoing contact with the real world: they track our location, credentials, etc. If generating a proof requires more than 1-2 GB of memory, that's too much for most of today's mobile devices. Two points need to be clarified:

· The 2 GB space limit applies to large statements (statements that require trillions of CPU cycles to run locally). Proof systems that only implement a space limit for small statements lack broad applicability.

· If a prover is very slow, it's easy to keep the prover's memory footprint below 2 GB. Therefore, in order to make Stage 1 memory non-trivial, I require Stage 1 speed to be met within this 2 GB space limit.

Memory Stage 2

Stage 1 speed is achieved with a memory footprint of less than 200 MB (10 times better than Memory Stage 1).

Why push it below 2 GB? Consider a non-blockchain example: every time you visit a website through HTTPS, you download a certificate for identification and encryption. Instead, the website could send zk proofs with these certificates. A large website could issue millions of such proofs per second. If each proof requires 2 GB of memory to generate, that would require a total of PB-level RAM. Further reducing memory usage is crucial for non-blockchain deployments.

Precompiles: The Last Mile or a Crutch?

In zkVM design, precompiles are specialized SNARKs (or constraint systems) tailored for specific functions, such as Keccak/SHA hashing for digital signatures or elliptic curve group operations. In Ethereum (where much of the heavy lifting involves Merkle hashing and signature checking), some hand-crafted precompiles can reduce the verifier's costs. However, relying on them as a crutch does not allow SNARKs to achieve their intended purpose. Here's why:

· Still too slow for most applications (both internal and external to blockchains): Even with hash and signature precompiles, the current zkVM is still too slow (both inside and outside blockchain environments) due to the inefficient core proof system.

· Security Failures: Handwritten precompiles not formally verified are almost certainly riddled with bugs, potentially leading to catastrophic security failures.

· Poor Developer Experience: In most zkVMs today, adding a new precompile means manually writing a constraint system for each functionality — essentially reverting back to a 1960s-style workflow. Even with existing precompiles, developers must refactor code to invoke each precompile. We should optimize for security and developer experience rather than sacrificing both in pursuit of incremental performance gains. Doing so only proves that performance has not met its true potential.

· I/O Overhead and Lack of RAM: While precompiles can improve performance for heavy cryptographic tasks, they may not provide meaningful acceleration for more diverse workloads as they incur significant overhead when handling input/output and cannot use RAM. Even in a blockchain context, as soon as you move beyond a single L1 like Ethereum (e.g., if you want to build a series of cross-chain bridges), you encounter different hash functions and signature schemes. Redoing precompiles over and over for the same problem is not scalable and poses significant security risks.

For all these reasons, our primary task should be to enhance the efficiency of the underlying zkVM. The technology that produces the best zkVM will also produce the best precompiles. I do believe precompiles will remain crucial in the long run, but only if they are auto-synthesized and formally verified. This way, we can maintain the developer experience advantage of zkVM while avoiding disastrous security risks. This viewpoint is reflected in Speed Phase 3.

Expected Timeline

I expect a few zkVMs to achieve Speed Phase 1 and Memory Phase 1 later this year. I also anticipate Speed Phase 2 to be achieved within the next two years, although it is currently unclear if we can reach this goal without some yet-to-emerge new ideas. I predict the remaining phases (Speed Phase 3 and Memory Phase 2) will take a few more years to accomplish.

Conclusion

While I have delineated the security and performance stages of zkVM separately in this article, these aspects of zkVM are not entirely independent. As more vulnerabilities are found in zkVM, it is expected that some vulnerabilities can only be fixed at the cost of a significant performance hit. Performance should be deferred until zkVM reaches Security Phase 2.

zkVM promises to truly democratize zero-knowledge proofs but is still in its infancy — filled with security challenges and significant performance overhead. Hype and marketing make it difficult to assess true progress. By outlining clear security and performance milestones, this roadmap aims to provide a distraction-free path forward. We will achieve the goals, but it will take time and sustained effort.

Original Article Link

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. Clarify the essential attributes of virtual currency, Real-World Assets tokenization, and related business activities

(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.

II. Sound Work Mechanism

(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.

III. Strengthened Risk Monitoring, Prevention, and Disposal

(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.

IV. Strict Supervision of Domestic Entities Engaging in Overseas Business Activities

（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.

V. Strengthen Organizational Implementation

(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.

VI. Legal Responsibility

(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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The AI mega-capex cycle itself is transitioning from "liquidity injection" to "liquidity extraction," leading to a significant shortage of global financial capital.

Why Is Gold, US Stocks, Bitcoin All Falling?

Trust Crisis in Tech Stocks

Key Market Intelligence for February 5th, how much did you miss out on?

1. On-chain Funds: N/A 2. 24h Price Range: $HOLY MOLY, $WARD 3. Top News: After Multicoin Co-Founder Kyle Announced His Departure, the Crypto Community Sounded the Talent Drain Alarm

Wintermute: By 2026, crypto had gradually become the settlement layer of the Internet economy

The Internet has enabled information to flow freely across borders, platforms, and systems, but value has lagged behind.

Token Cannot Compound, Where Is the Real Investment Opportunity?

The next chapter in the crypto industry will undoubtedly be written by Crypto-empowered Stocks.

February 6th Market Key Intelligence, How Much Did You Miss?

China's Central Bank and Eight Other Departments' Latest Regulatory Focus: Key Attention to RWA Tokenized Asset Risk