From the new RWA policy, observe the internal and external circulation of Digital RMB 2.0

Written by: Wang Yang

On January 1, 2026, Digital RMB officially upgraded to version 2.0. This upgrade transforms Digital RMB from M0 cash into a deposit currency, begins paying interest, and grants operational rights to commercial banks. Subsequently, on the evening of February 6, the People’s Bank of China, China Securities Regulatory Commission, and six other ministries issued the “Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies” (hereinafter referred to as the “Notice”), reaffirming the strict ban on virtual currency activities within mainland China while leaving space for compliant development of asset tokenization in the real world (RWA). At the same time, the China Securities Regulatory Commission released the “Regulatory Guidelines for Domestic Asset-Backed Securities Issuance Overseas” (hereinafter referred to as the “Regulatory Guidelines”), establishing rules and pathways for domestic assets to be issued as RWA abroad.

These seemingly independent policy actions are actually interconnected, with subtle underlying implications. Policies related to RWA may seem unrelated to the upgrade of Digital RMB, but they create conditions for building an effective circulation system for Digital RMB. They also present a historic opportunity for Hong Kong to become an offshore Digital RMB market and a core node linking China and the world in a dual circulation system.

Digital RMB 2.0 “integrates digital technologies such as account-based systems, digital tokens, smart contracts, and blockchain, transitioning Digital RMB from electronic payments into the digital payment era,” according to an article by Lu Lei, member of the Party Committee and Vice Governor of the People’s Bank of China, published in the mainland’s Financial Times on December 29, 2025 (hereinafter referred to as “Lu Wen”).

If we compare the technological foundation of Digital RMB to a uniquely Chinese “blockchain,” then Digital RMB 2.0 signifies not only an upgrade in currency form but also a “blockchain-like” reconstruction of China’s financial infrastructure. Meanwhile, “digital assets” and RWA play a crucial role in leveraging the effective circulation of Digital RMB.

01 Domestic Circulation: Financial Assets Gradually Enter the “On-Chain” Trading Era

In mainland China, Digital RMB 2.0 means the financial industry will gradually migrate to the People’s Bank of China’s “on-chain” operations.

First, basic banking operations such as deposits, loans, and remittances will be “on-chain.” With Digital RMB upgraded to a deposit-type currency and incorporated into commercial banks’ liabilities, deposits, loans, and remittances (payments) can be fully “on-chain” and “digitized.” Practically, there are no obstacles remaining.

Second, financial assets will also “go on-chain.” Besides basic banking operations, financial assets can gradually transfer to the “on-chain” realm. The international Digital RMB operation center has established a “digital assets” platform, which can be understood as “digitized assets” and “digitized settlement of assets.” Although there are few existing cases, initial attempts have been made, such as Huaxia Bank leading the issuance of Huaxia Financial Leasing’s Digital RMB financial bonds.

Just before the publication of “Lu Wen,” in early December 2025, Huaxia Bank led a book-building process and successfully issued Huaxia Financial Leasing’s 2025 financial bonds (Phase II) worth 4.5 billion RMB using an innovative “blockchain bookkeeping + Digital RMB collection” model, a industry first. In this case, blockchain addressed information asymmetry issues in traditional issuance, and funds raised were collected via Digital RMB, eliminating multiple clearing steps.

This example demonstrates that financial markets can be rebuilt and innovated based on digital currency infrastructure—bonds, stocks, funds, derivatives, and more. When financial assets are fully “on-chain,” we will have a transparent, real-time clearing, low-cost “on-chain” financial ecosystem. Of course, this is a gradual process.

The “Notice” also leaves room for imagination regarding RWA in mainland China: “Activities involving the tokenization of real-world assets within the territory… should be prohibited; except for relevant business activities conducted with the approval of the competent authorities and based on specific financial infrastructure.” Will the Digital RMB international operation center’s digital assets platform become a “specific financial infrastructure” at the right time?

02 External Circulation: Expanding the RMB Asset Base in Hong Kong’s Digital Asset Market

Amid major changes in the global payment and settlement system, especially with the surge of stablecoins and digital assets, how Digital RMB can achieve “external circulation” is also a key focus, perhaps even more so than internal circulation.

In cross-border payment and settlement, the multilateral central bank digital currency bridge (mBridge) explores a new international payment system based on CBDCs. Hong Kong is actively developing its digital asset market, which could become the core engine for Digital RMB’s offshore circulation. For Digital RMB to circulate abroad, integration into efficient financial markets is essential. The emerging digital asset market offers an ideal starting point for the nascent Digital RMB.

In Hong Kong’s digital asset market, Digital RMB has already been tested in settlement. In November 2025, the Hong Kong SAR government announced the successful pricing of approximately HKD 10 billion equivalent in digital green bonds under the government’s sustainable bond program, covering HKD, RMB, USD, and EUR, with RMB accounting for HKD 2.5 billion. The primary issuance of these bonds, besides traditional settlement methods, is among the first globally to incorporate Digital RMB and Digital Hong Kong dollar in the settlement process.

In the Ensemble sandbox experiment, successful issuance of RWA-backed bonds using mainland RMB assets as underlying assets (such as Langxin Group and Xunying Mobility cross-border RWA projects) has been achieved. Additionally, RWA projects backed by offshore RMB assets, such as Huaxia RMB Digital Currency Fund, have also been issued.

The Regulatory Guidelines issued by the China Securities Regulatory Commission enable mainland RMB assets to be issued as RWA abroad in compliance. Hong Kong is poised to be the best market for hosting mainland RWA assets. As regulatory coordination and market development progress, larger-scale issuance of digital assets backed by RMB assets in Hong Kong is expected, expanding the offshore circulation of RMB assets and providing diversified investment options for offshore Digital RMB. Naturally, the preferred settlement currency will be Digital RMB.

As the volume and variety of assets denominated in Digital RMB increase offshore, conditions will be favorable for issuing offshore RMB stablecoins. From a developmental perspective, stablecoins are likely to become a key usage habit for market participants abroad. In the process of RMB internationalization, offshore RMB stablecoins are a future option. Digital RMB deposits and liquidity assets will serve as necessary reserves for offshore RMB stablecoins.

The “Notice” stipulates that “any units or individuals, within or outside the territory, shall not issue RMB-pegged stablecoins abroad without approval from relevant authorities.” While this is a prohibitive regulation, it also creates advantageous geopolitical conditions for Hong Kong to develop Digital RMB business at the appropriate time.

Based on the “digitization” of RMB assets, the Digital RMB settlement network, and offshore RMB stablecoins, Hong Kong will become a new global offshore RMB hub, providing efficient markets and tools for the value creation and liquidity management of offshore Digital RMB, broadening application scenarios, and increasing the willingness to hold Digital RMB abroad.