On February 6, 2026, a heavyweight document jointly issued by the People's Bank of China and eight other departments (Notice on Further Preventing and Handling Risks Related to Virtual Currencies, etc.) (Yin Fa [2026] No. 42) officially replaced the old ban from 2021, outlining an unprecedentedly clear and strict regulatory framework for the tokenization of virtual currencies and real-world assets (RWA). With the new policy in place, there are vastly different interpretations from the outside world: Is it a 'breaking the ice journey' marking China's shift from a complete ban to a controlled and compliant asset tokenization environment, or does it mean incorporating emerging financial risks into the traditional strong regulatory framework of 'ironclad encirclement'? Among them, the blockchain project Dusk Network (DUSK), which starts from the European market and features 'privacy + compliance', has been pushed into the spotlight by some market opinions, even being discussed as the 'biggest beneficiary'. To explore the truth, we must compare the details of the policy text with DUSK's own positioning, rather than being misled by superficial labels.
Interpretation of the new policy: from 'comprehensive prohibition' to 'penetrative regulation'
In stark contrast to some market interpretations of a 'shift towards looseness', Document No. 42 demonstrates an upgrade and deepening of regulation in both wording and execution.
Firstly, the 'red line' of comprehensive prohibition has not loosened and is becoming clearer. The document states unequivocally that all virtual currency-related activities (including exchanges, issuance financing, derivatives trading, etc.) are illegal financial activities and are strictly prohibited. Notably, this time, the tokenization of real-world assets (RWA) is clearly defined and incorporated into the regulatory view, indicating that its illegal financial activities within the territory should also be prohibited. This is fundamentally different from the claim of 'shifting to a controlled regulatory environment'.
Secondly, the establishment of overseas extended regulation is about 'compliance access' rather than 'openness'. For RWA tokenization, the only exception allowed by the new regulations is: 'Relevant business activities conducted based on specific financial infrastructure with the legal consent of the relevant business authorities.' At the same time, for domestic entities going abroad to conduct RWA tokenization involving domestic rights (such as domestic asset ownership and income rights), they must follow the principle of 'same business, same risk, same rules', subject to strict regulation and filing by departments such as the National Development and Reform Commission and the China Securities Regulatory Commission. This essentially extends the compliance threshold and regulatory logic of domestic financial activities penetratively to related overseas businesses, aiming to eliminate regulatory arbitrage. This does not greenlight Chinese enterprises or individuals to participate in unapproved overseas public chain projects, but rather provides a compliance path for strictly controlled 'minority' activities that are centered around specific domestic financial infrastructures.#dusk
The real narrative of DUSK: European compliance, rather than Chinese opportunities
Understanding the 'penetrative' essence of the policy reveals that the core narrative of the DUSK project not only does not align with China’s new policy but also has direct conflicts in regulatory sovereignty.
DUSK is a Layer-1 blockchain focused on providing privacy protection and compliance tools for regulated financial markets. Its core development logic is rooted in the European market, aiming to meet the requirements of regulatory frameworks such as the EU’s Markets in Crypto-Assets Regulation (MiCA). Its recent market performance has been impressive, stemming from strategic partnerships with the licensed European exchange NPEX and the oracle Chainlink, targeting the tokenization of over 300 million euros in real assets. Its technology design of 'default privacy, on-demand auditing' is precisely to respond to European regulators' demands for transparency and anti-money laundering (AML) while protecting commercially sensitive information.@Dusk
A project dedicated to providing compliance on-chain services for European financial institutions under the EU legal framework, its success depends on the implementation of EU regulation and the progress of partnerships. The new policy in China, on one hand, completely prohibits any virtual currency-related business defined by it within its territory (DUSK is clearly included), while on the other hand, it establishes strict pre-approval and filing for overseas tokenization projects involving Chinese interests, effectively closing the possibility for DUSK to absorb Chinese assets or provide services to entities within China without approval.
Ice and fire: Who will benefit?
Thus, the new RWA policy in China presents a 'dual reality' scenario between overseas compliance public chain projects like DUSK.
The 'fire' aspect belongs to DUSK's European narrative. This extremely cautious policy from China indirectly confirms that the development trend of RWA in the global traditional financial sector is unstoppable. The clear compliance frameworks established in places like Europe (such as MiCA) are attracting capital and technology to converge here. The growth of DUSK fundamentally relies on the successful navigation of compliance paths outside the Chinese market and the acceleration of institutional adoption.
One side of 'ice' lies in the absolute isolation of the Chinese market. China's policy direction clearly indicates that the core purpose of its regulation on RWA is not to encourage innovation, but to prevent risks and maintain financial order. The biggest potential 'beneficiary' is not any decentralized public chain, but the institutions and technological systems recognized and controlled by the Chinese government, which serve as 'specific financial infrastructure'. Any possible domestic compliant RWA exploration in the future will occur within this highly centralized and strictly regulated 'golden cage'.
Linking China’s new policy aimed at strengthening financial security barriers and establishing penetrative overseas regulation to the future development of a compliance privacy public chain based on the European market is a misreading. The 'fire' of DUSK burns on the soil of EU MiCA regulations; while the 'ice' of Chinese RWA regulation aims to freeze all unapproved cross-border financial risks. The two belong to parallel worlds, each depicting different future scenarios for asset digitization. For market observers, abandoning the search for a simple 'biggest winner' narrative and instead deeply understanding the divergent regulatory philosophies and market logics of different jurisdictions is the key to navigating through the fog of this 'compliance winter'.$DUSK
