Hainan Local Financial Regulatory Bureau: Beware of the chaos caused by "pseudo token exchanges," and reiterate that RWA tokenization activities are prohibited within the country.

ChainCatcher message: According to Hainan Daily, the Hainan Provincial Local Financial Administration has issued a risk alert regarding trading venues. Recently, the Hainan Provincial Local Financial Administration learned through relevant channels that certain entities have been promoting themselves under names such as “Hainan International Data Asset Exchange,” “Hainan Data Exchange,” and “Hainan HAI Exchange,” claiming that they can conduct RWA real-world asset and RDA real-data asset business in a compliant manner.

Market entities that conduct business in violation of regulations without approval, using the name of a trading venue, may be suspected of illegal financial activities and infringe on the safety of the public’s property. In response, the Hainan Provincial Local Financial Administration provides the following risk alert:

1. At present, within my province’s jurisdiction, “Hainan International Data Asset Exchange” has not been approved for establishment. If my province establishes a trading venue, it must be approved by the provincial government (for the list of trading venues approved for establishment, see the appendix). Without approval from the competent authorities, market operators may not use words such as “exchange” or “trading center” in their registered names, nor may they carry out business activities related to trading venues.

2. The eight departments, including the People’s Bank of China and the China Securities Regulatory Commission, jointly issued the “Notice on Further Preventing and Addressing Relevant Risks Concerning Virtual Currencies,” which clarifies that for the tokenization of real-world assets (RWA), the regulatory principle of “strictly prohibited domestically, tightly supervised overseas” will be applied. It also emphasizes that carrying out tokenization of real-world assets (RWA) within the territory of China, as well as providing related intermediaries and information technology services, is suspected of illegal activities such as illegally issuing tokenized securities, unlawfully publicly issuing securities, illegally operating securities and futures business, and illegal fundraising, and such conduct should be prohibited.

3. Please encourage the broad investing public to establish the correct investment philosophy.