After years of regulatory crackdown and near total disengagement from the crypto industry,China may be preparing for a quiet but strategic re entry this time through stablecoins and real world asset (RWA) tokenization.That’s according to Livio Weng,CEO of HashKey Group,one of Asia’s leading digital asset firms,who recently shared insights on China’s evolving stance toward digital finance.
China’s Complicated History with Crypto
China’s relationship with cryptocurrency has been rocky at best. Starting in 2017 the country imposed sweeping bans on initial coin offerings (ICOs),shut down domestic crypto exchanges and later in 2021,prohibited Bitcoin mining and all crypto transactions.These moves effectively made China a no go zone for mainstream crypto activity.
Despite the hardline stance,China didn’t abandon blockchain technology altogether.In fact,it doubled down on centralized efforts most notably the rollout of its central bank digital currency (CBDC),the Digital Yuan (e-CNY).However,permissionless cryptocurrencies and decentralized finance remained strictly off limits.
HashKey CEO Predicts a Phased Re-engagement
In a recent interview with BeInCrypto,HashKey CEO Livio Weng offered a bold prediction: China could re enter the crypto sector as early as 2025,starting with stablecoins and tokenized RWAs.
“Mainland China is not returning to traditional crypto trading anytime soon,” Weng clarified.“However,we believe that the government may embrace compliant forms of crypto innovation,especially those that support real world economies and align with financial stability.”
Weng’s prediction is grounded in Beijing’s growing interest in digital finance infrastructure,including asset tokenization,cross border payments and regulated digital currencies all of which overlap with select aspects of the crypto ecosystem.
Why Stablecoins and RWAs Are the Ideal Entry Points
Unlike volatile cryptocurrencies like Bitcoin or Ethereum,stablecoins are designed to maintain price parity with fiat currencies,making them suitable for cross border trade,remittances and enterprise payments key interests for China.
Similarly,real world asset (RWA) tokenization refers to representing physical or traditional financial assets such as real estate,bonds and equities on a blockchain.Tokenizing RWAs can improve liquidity,transparency, and operational efficiency in capital markets,all while being fully auditable and regulator friendly.
China’s central planners are increasingly exploring these blockchain use cases to modernize infrastructure,particularly in pilot zones like Shanghai and regulated offshore hubs like Hong Kong.
Hong Kong:China’s Crypto Testing Ground
While the mainland maintains a crypto ban,Hong Kong has rebranded itself as a pro crypto jurisdiction,issuing licenses to platforms like HashKey Exchange and OSL.The Hong Kong government has also introduced frameworks for stablecoin regulation,tokenized securities and Web3 industry support.
Livio Weng sees Hong Kong as a strategic experiment zone for China’s broader crypto ambitions:
“Hong Kong offers the perfect sandbox environment highly regulated,but internationally connected.If stablecoins and RWAs gain traction here,it’s likely that Beijing will take notice and consider similar mechanisms for the mainland.”
Implications for Global Crypto Markets
If China returns to the crypto world even in a limited,regulated form the impact could be enormous:
- Increased adoption of stablecoins,particularly RMB backed or Asia centric variants.
- Acceleration of tokenization infrastructure for global assets,boosting the RWA ecosystem.
- Competitive pressure on other Asian crypto hubs like Singapore,Korea and Japan.
- A more mature,regulated crypto environment,with China possibly shaping global norms.
However,analysts warn that China’s involvement will likely come with tight controls,surveillance mechanisms and restrictions on capital outflows a far cry from the freewheeling ethos of early crypto.
Industry Reactions and Expert Insight
Crypto policy watchers are cautiously optimistic.Some believe that China’s entry could legitimize asset backed crypto products,while others fear it could lead to a more fragmented global regulatory landscape.
Matthew Graham,CEO of Sino Global Capital,recently noted that “RWA tokenization may be the only acceptable path forward for China’s blockchain integration,as it aligns with financial policy and industrial goals.”
Meanwhile,developers in the Web3 and fintech sectors are already exploring RMB backed stablecoins,on chain trade financing and government friendly DeFi protocols to get ahead of the curve.
Conclusion:A Strategic Shift,Not a Full Reversal
China is not returning to crypto in the way it left it.The days of unregulated ICOs, permissionless trading and crypto mining farms are over.But a new era one defined by regulated stablecoins,tokenized assets and centralized compliance first innovation may be on the horizon.
With 2025 as a likely inflection point,all eyes are on Hong Kong’s regulatory progress and pilot programs on the mainland.