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DePAI: When Robotics Meets Web3, Can a New Narrative Begin?
Original Article Title: What is DePAI (Decentralized Physical AI)?
Original Article Author: peaq
Original Article Translation: Deep Tide TechFlow
NVIDIA introduced the concept of "Physical AI" at CES. Today, "Decentralized Physical AI (DePAI)" has become a hot topic in the crypto industry. So, what is DePAI? What is its connection to robotics? What conditions do these robots need to operate as decentralized physical AI in the machine economy proposed by peaq?
DePAI: When C3PO Meets Web3
Another new term has emerged. DePAI, short for Decentralized Physical AI, has recently become a focal point in the crypto industry. This concept was introduced by Messari, and prior to this, NVIDIA's CEO Jensen Huang first promoted the concept of "Physical AI" at CES in January 2025. The new term DePAI has sparked extensive discussions within the industry and is indeed worth paying attention to.
DePAI is a concept that integrates AI, robotics, Web3, and DePIN (Decentralized Physical Infrastructure Network) among other cutting-edge technological fields. It organically combines these emerging fields into a powerful new paradigm. This integration not only showcases the synergistic potential of these technologies but also heralds that they will jointly drive industry transformation and fundamentally alter the operation of the global economy.
So, why should you pay attention to it? If you are a member of the workforce, you may already be concerned about the trend of robots and AI replacing human work. The emergence of DePAI is a solution to address these potential challenges. It is expected to become a key driver of the future global economy, providing us with a way to deal with and mitigate the disruptive impact of AI.
But what exactly is DePAI? How does it differ from traditional physical AI (i.e., robotics)? Why is it so important?
Let's dive deeper into it.
What is DePAI?
Literally, "Decentralized Physical AI (DePAI)" doesn't seem to be a brand-new concept. After all, the technology of a decentralized physical hardware network providing computational power for AI models already exists. However, DePAI is not limited to just decentralized computing power; its significance goes far beyond.
DePAI is a broader concept involving real-world machine devices, particularly robots, utilizing artificial intelligence technology to achieve survival and development in the real world. All of this relies on the infrastructure of Web3. Additionally, DePAI relies on crowdsourced data to help machines perceive the world and interact with the environment. It also requires a complete set of infrastructure to support the economic model built around this new paradigm.
In simple terms, DePAI integrates robotics, intelligent AI, spatial intelligence, and DePIN, among other areas. It envisions a future scenario where robots and machines, tangible AI, can not only operate autonomously but also have autonomy and sovereignty in the Web3-driven machine economy.
From AI to DePAI
When we talk about ChatGPT, almost everyone knows about it. For most people, this large language model (LLM) introduced by OpenAI has become almost as ubiquitous as Google, Netflix, or social media platforms used daily. However, just two years ago, hardly anyone knew about the existence of ChatGPT.
Even more astonishing is how artificial intelligence has made a leap in a short period. From initially focusing on content generation in Generative AI to evolving into Agentic AI capable of independent decision-making, this transformation is remarkable. For example:
· Generative AI: You input a week's meal plan, and AI generates a shopping list for you.
· Agentic AI: It not only analyzes your health data, creates an optimized meal plan, and recommends daily recipes, tracks fridge inventory, but also automatically places orders when ingredients are running low—ensuring your kitchen is never empty.
From passive-reactive Generative AI to proactive decision-making Agentic AI, this change has been a tremendous leap. As Agentic AI gets a physical "body" and starts executing tasks in the real world, the future possibilities will be even broader. Yes, the era of robotics is already here, and AI industry giants like NVIDIA are leading this trend.
However, centralized AI, especially centralized physical AI, also brings many challenges and risks. For example, where does the data needed for AI models to understand and interact with the physical world come from?
This issue is further extended to the field of robotics. Who will own these robots? Which hardware vendor will determine the standard protocols for compatibility and interoperability among robots? Ultimately, who will benefit from this? Are we heading towards a future where large corporations earn huge profits while ordinary people can only rely on Universal Basic Income (UBI) relief? Or is there another possibility?
The answer lies in DePAI.
The significance of DePAI for physical AI is akin to the significance of DePIN (Decentralized Physical Infrastructure Network) for physical infrastructure—it is an upgrade that reverts the power monopolized by a few companies back to the hands of ordinary people. Of course, this is not to say that DePAI and DePIN are completely independent. In fact, DePIN is a crucial part of the DePAI model.
DePIN provides key data and services for digital and physical AI, and peaq builds the core infrastructure layer supporting DePIN and decentralized hardware operations. Besides these two, for robots to efficiently function as decentralized physical AI in the global machine economy, they also need to rely on several other critical layers. As we will see, DePIN plays a vital role in these layers.
The Seven Core Layers of DePAI
You may have already realized that DePAI is an extremely complex system. Building a truly functioning Machine Economy is far more than just putting a Ledger on an Optimus robot.
True autonomous physical AI (DePAI) requires support from the following seven key layers:
· Hardware Layer: This is the foundation, referring to the robotic devices that allow AI models to interact with the physical world. Without this hardware, physical AI can only remain at a theoretical level.
· Software Layer: The intelligent agent AI models running on the robot. These models give robots autonomy to perform complex tasks.
· Data Layer: Data is the core driving force for physical AI learning and evolution. Without high-quality data support, AI cannot adapt to the dynamic changes of the real world.
· Spatial Intelligence Layer: This layer enables robots to understand the environment and interact with the physical world, such as object recognition, path planning, or hazard detection.
· Infrastructure Network Layer: Provides key resources such as storage, computing power, energy, etc. These resources are essential for supporting the continuous operation of physical AI.
· Machine Economy Layer: Integrates all the above elements through specialized protocols to ensure seamless collaboration between different types of DePINs (Decentralized Physical Infrastructure Networks), AI models, and robots.
· Organizational Layer: For example, DePAI DAO, this layer provides a decentralized governance model that allows individuals, communities, and businesses to equally own and benefit from DePAI.
These seven layers together build the complete ecosystem of DePAI. Next, let's delve into the specific functions and significance of each of these layers.
AI Agent
In previous discussions, we have mentioned the importance of AI Agents. Here's a brief recap: AI Agents are AI systems that can autonomously plan, make decisions, take action, and perform tasks without any human intervention.
These agents typically focus on specific types of tasks, such as logistics optimization or home assistants. In more complex scenarios, multiple agents can also be integrated into a single machine to collaborate on diverse tasks. In the context of DePAI, AI Agents can be seen as the "consciousness" of machines. Yes, we are steadily moving in that direction.
Robots
Robots are at the core of the "Physical" aspect of "Physical AI." They are the hardware platforms on which AI systems run and the bridge through which AI interacts with the real world. From autonomous vehicles and industrial machinery to surgical assistants and feature-rich humanoid robots like Tesla Optimus, robots are integrating into our lives in various forms. They are not only the carriers of physical AI but also key to translating AI theory into real-world applications.
Data Network
AI's operation relies on data, especially large amounts of high-quality data. Fortunately, DePINs such as MapMetrics, Silencio, Teneo, SkyX, and Hyperway have accumulated rich real-world data, which can provide strong support for advanced AI models. By leveraging this existing information, AI Agents can not only learn the operational rules of the real world but also make real-time decisions based on precise and verifiable datasets. For example, an autonomous vehicle can utilize this data to understand city traffic conditions and plan the best route.
Spatial Intelligence
If the data network helps AI understand the operating rules of the real world, the spatial intelligence layer enables AI-driven machines to navigate in real time and interact with the real world. In simple terms, this layer builds a virtual replica of the real world—a digitized environment where AI can simulate and coordinate.
You can think of it as a video game world synchronized with the real world, or even further, a "metaverse" version of the real world composed of decentralized autonomous AI. In this virtual environment, physical AI agents can learn how to identify objects, plan routes, and even predict potential hazards.
The implementation of this layer also relies on spatial data provided by DePINs, but its role goes far beyond that. Some specialized DePINs can create virtual training scenarios, providing a "digital playground" for physical AI to better understand and adapt to the complexity of the real world.
Infrastructure Network
The infrastructure network (such as DePINs) is the cornerstone that supports the entire physical AI ecosystem. They provide all the underlying resources needed for AI and robots to operate, such as computing or data storage, energy supply, and even the network of decentralized internet and energy grid.
Machine Economy
In the Machine Economy, Layer-1 blockchain is the core pillar of the entire ecosystem. It supports infrastructure DePINs, data collection DePINs, spatial perception DePINs, robot DAOs, and DePAI itself, playing a crucial role. This blockchain not only establishes standards for machines (such as unique identifiers IDs) and protocols, enabling autonomous robots to efficiently collaborate and interact in the physical world, but also provides the infrastructure for applications and transactions, supporting seamless integration among all applications and machines. Essentially, it builds a global machine economy market.
More importantly, this blockchain ensures that robots act in the best interest of humanity through incentive and penalty mechanisms, interests that are decided by humans through voting. Additionally, it promotes governance on a global scale, providing an open participation system that allows ordinary people to integrate into the machine economy, not just a few large corporations. This also paves the way for a decentralized resource allocation mechanism to drive a more equitable distribution of wealth.
DePAI DAO
To address the impending employment crisis, DePAI is committed to ensuring that everyone has the opportunity to participate in ownership of physical AI and benefit from participating in the machine economy. However, the reality is that robotic equipment is costly. Whether it's industrial robotic arms, a fleet of delivery drones, or an autonomous vehicle, ordinary people find it challenging to afford.
At this point, Decentralized Autonomous Organizations (DAOs) have played a key role, especially those focused on robotics and physical AI. These organizations have provided ordinary people with the opportunity to invest in DePAI, regardless of their purchasing power or geographic location, while also establishing mechanisms to coordinate funds and decisions with industry experts.
For example, XMAQUINA DAO is a DAO focused on robotics and physical AI. They not only foresaw the rise of the DePAI model but also were the first to propose a framework that allows individuals and communities to seize the opportunity in this technological transformation.
XMAQUINA—Your DePAI Mentor
Currently, the global economy is undergoing two profound transformations: digital AI is replacing white-collar work, while physical AI is reshaping blue-collar work. Digital AI is intelligent, efficient, and tireless, while physical AI never complains, never rests, and remains focused. Both can work 24/7. In such a rapidly changing world, how can humans ensure their economic participation and capital gains?
This is where Decentralized Autonomous Organizations (DAOs) come into play. Taking XMAQUINA DAO as an example, it has created a framework for the decentralized ownership, governance, and development of robotic technology. Through this platform, communities, entrepreneurs, and investors can collectively contribute and develop, while ensuring that all contributors can share the economic value they create.
The significance of DAOs lies not only in shared ownership but also in governance. Real-world machine decisions need oversight. If rules are set by a centralized company, these rules may primarily serve the company's interests. DAOs provide a transparent way for the community to collectively decide how machines operate, interact with humans, and who benefits from it. All decisions are made in an open environment, rather than behind closed doors.
Furthermore, faced with the impact of automation on employment, DAOs provide a way for people to actively participate. Individuals can contribute through funding, management, or benefiting from physical AI, rather than passively accepting being replaced. Instead of watching giant corporations monopolize everything, why not fight for a place for yourself through DAOs?
How is a DePAI DAO different from a typical DAO?
Most DAOs (Decentralized Autonomous Organizations) primarily focus on digital assets, Decentralized Finance (DeFi), or fully online governance models. In contrast, a DePAI DAO focuses on real-world businesses and machines, such as robotics, sensor networks, and autonomous vehicles. These machines require continuous maintenance, coordination, and management, so the challenges faced by a DePAI DAO go far beyond the traditional DAO's token staking or governance proposals. They must entrust the day-to-day management of the machine network to companies capable of actually executing tasks in the physical world to achieve efficient operation.
In addition, DePAI DAO also has a significantly different governance model. Unlike financial DAOs that usually only need to manage digital transactions, DePAI DAO needs to strike a balance between AI ethics, machine decision-making, and real-time operations. They must establish a governance system that can address behavioral norms for robots in public spaces, transparency in data usage, and income distribution rules. For example, a DAO managing delivery drones not only needs to coordinate the drones' operation routes and ensure safety but also needs to devise a scheme for distributing profits to members. This complex governance requirement makes DePAI DAO more functionally similar to real-world corporate management.
Take XMAQUINA DAO as an example, which is focused on physical AI and has achieved shared ownership, shared governance, and shared creation within a framework. By participating in the financing of physical AI companies, XMAQUINA DAO allows ordinary members to access investment opportunities in the robotics industry without needing to be venture capitalists or private equity funds. Additionally, XMAQUINA DAO has its development lab, focusing on open-source project development and incubating new physical AI projects. Its distributed governance structure ensures that the control of funds is entirely in the hands of DAO members, achieving true decentralization.
As AI-driven machines gradually integrate into our daily lives, how to fund, manage, and govern these machines has become an increasingly important issue. DePAI DAO offers a brand-new solution that not only allocates ownership and decision-making but also automatically shares risks and rewards with a broader community. In this way, the machine economy can remain open, transparent, and community-driven.
Why DePAI Is Important
After understanding the definition and operation of DePAI, one cannot help but ask: Why is it so important?
The rapid advancement of AI has brought tremendous potential to improve human life, but it also comes with some worrisome issues, with the most critical being centralization. Today, the data, models, and infrastructure driving AI are mostly controlled by a few large companies. Do we really want such a groundbreaking technology that profoundly alters society to be monopolized by a few?
DePAI offers a brand-new solution by democratizing robotic technology, redefining the rules of the game. It ensures that the community served by robots can collectively own, manage, and share the value created, rather than letting these benefits be monopolized by a few companies. On the one hand, this decentralized model provides more people with the tools and data resources to drive physical AI innovation, thereby sparking greater technological breakthroughs. More importantly, it directly addresses two global issues: job displacement and economic inequality.
By enabling ordinary people to own a part of Physical AI and participate in the Machine Economy, DePAI is paving the way for a more inclusive future. In this future, AI will not only serve a few resource-controlling enterprises but will bring benefits to all of humanity.
The Challenges Facing DePAI
As an emerging technology, DePAI will inevitably face many challenges in realizing its vision.
First is the issue of scalability. Both in terms of data volume and computational power, the current infrastructure is not sufficient to support large-scale Physical AI applications. Although some DePINs already provide the necessary data and compute support, more resources need to be invested to achieve widespread adoption of Physical AI.
Second is the infrastructure development issue. Physical AI requires real-time processing of large amounts of real-world data, including collection, analysis, and execution of operations. For example, autonomous vehicles need to navigate autonomously in complex city environments, delivery drones need to coordinate routes, and agricultural robots need to perform precise operations based on sensor network data. All of this demands high-speed data transfer.
While some computational tasks can be offloaded to edge computing for off-chain processing, a significant number of transactions and crucial data validations still rely on on-chain processing. This "dual-track" mode requires both robust off-chain computing capabilities and an efficient blockchain network to support overall operation.
Interoperability: A Key Issue in the DePAI Ecosystem
In the DePAI ecosystem, interoperability is a crucial issue that spans multiple levels. As more manufacturers join, different types of machines and AI models are often distributed across multiple DePIN networks and blockchains, necessitating seamless communication. This communication needs to be achieved both at the hardware level—ensuring machines using different protocols can interact smoothly—and at the software level—allowing AI models to learn from each other and collaborate, regardless of their technical architectures.
From an infrastructure perspective, different networks and protocols must be able to achieve data sharing, execute cross-chain transactions, and coordinate machine operations. These operations need to overcome differences in governance mechanisms, economic models, and incentive structures. Without this interoperability, the DePAI ecosystem may become fragmented, preventing it from functioning as a cohesive, decentralized Machine Economy. For example, if delivery drones and autonomous vehicles cannot share real-time traffic data, their efficiency would be greatly reduced, potentially leading to safety issues.
Fortunately, these issues are gradually being addressed. Currently, an increasing number of peaq-based DePINs have begun to collect large amounts of real-world data, which can be used by AI models to optimize decision-making and operations. At the same time, peaq's blockchain infrastructure boasts high throughput of over 500,000+ TPS (transactions per second), ensuring these DePINs can operate stably in a broader machine economy. Additionally, the peaq verify framework can validate this data to ensure its authenticity and reliability.
However, the challenges in the interoperability space are more complex. Manufacturers need to establish and adopt unified standards and protocols for the growing number of physical devices. One existing standard worth mentioning is peaq IDs, which has provided a common protocol enabling machines to recognize, interact, and share data with each other. For example, through peaq IDs, smart home devices can collaborate with delivery robots to achieve seamless package reception and storage.
How to Dive Deeper into DePAI
Has all the discussion about DePAI piqued your interest? If you wish to get involved and contribute to building a better, safer, and fairer future for physical AI, you can take action now! You can start today by using DePINs built on peaq. These networks can not only help collect the data necessary for running advanced intelligent AI models in the real world but also reward your contributions accordingly. For instance, through participating in data sharing, you may receive tokens or other forms of economic rewards. If you feel lost about how to get started, consider following the ongoing "Get Real" event, designed especially for beginners to gradually guide you on your DePIN exploration journey.
If you wish to be more directly involved in the development of physical AI, such as owning your own robot, do not miss out on the latest updates from XMAQUINA DAO. Their Genesis auction phase two is about to commence, offering you a great opportunity to become part of the machine economy and own your physical AI asset. By participating in the auction, you can not only gain ownership of a robot but also secure a position in the future machine economy.
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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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