Seven industry associations issued risk warnings: Be wary of illegal fundraising, pyramid schemes, and other fraudulent activities using virtual currencies as a pretext.

On the evening of December 5th, the National Internet Finance Association of China, along with several other associations, jointly issued a "Risk Warning on Preventing Illegal Activities Involving Virtual Currencies," warning of the risks associated with cryptocurrency businesses such as "air coins," real-world asset tokens, and mining. The public is urged to enhance their risk awareness and identification capabilities, protect their finances, and refrain from participating in activities related to virtual currencies and real-world asset tokens, as well as illegal fundraising and securities issuance activities conducted under the guise of virtual currency "mining."

The following is the full text of the risk warning:

Recently, the concept of virtual currency has rapidly gained popularity, and some criminals have taken advantage of this to promote related trading and speculation activities. They are using the guise of stablecoins, worthless coins (such as Pi coin), Real-World Asset (RWA) tokens, and "mining" to conduct illegal fundraising, pyramid schemes, and other illegal activities, and are using virtual currencies to transfer proceeds of illegal activities. This seriously infringes upon the property security of the public and disrupts the normal economic and financial order. To further implement the requirements of the "Announcement on Preventing Risks of Token Issuance Financing" and the "Notice on Further Preventing and Handling Risks of Virtual Currency Trading and Speculation" issued by the People's Bank of China, the State Financial Regulatory Commission, and the China Securities Regulatory Commission, and to implement the spirit of the meeting of the Coordination Mechanism for Combating Virtual Currency Trading and Speculation, the China Internet Finance Association, the China Banking Association, the Securities Association of China, the Asset Management Association of China, the China Futures Association, the China Association of Listed Companies, and the China Payment and Clearing Association jointly issue the following risk warnings:

I. Correctly understand the essential attributes of virtual currencies, real-world asset tokens, and related activities

Virtual currencies are not issued by monetary authorities, are not legal tender, do not have the same legal status as legal tender, and cannot be used as currency within my country. Among them, cryptocurrencies like Pi Coin lack substantial technological innovation, clear commercial applications and value, have opaque issuance and operation mechanisms, and are prone to fraud and market manipulation. They are also frequently used as a front for pyramid schemes and scams. Stablecoins currently fail to effectively meet requirements for customer identification and anti-money laundering, posing a risk of being used for money laundering, fundraising fraud, and illegal cross-border fund transfers. Tokenization of real-world assets involves financing and trading activities through the issuance of tokens or other rights and bonds with token characteristics. This carries multiple risks, including the risk of fictitious assets, business failure, and speculative activity. Currently, my country's financial regulatory authorities have not approved any real-world asset tokenization activities.

Domestic institutions and individuals engaging in activities such as exchanging fiat currency for virtual currency, issuing and financing real-world asset tokens, etc., within China are suspected of illegal financial activities including illegally issuing token vouchers, illegal fundraising, unauthorized public offerings of securities, and illegal operation of futures businesses. Overseas virtual currency and real-world asset token service providers, whether directly or indirectly providing services to my country for related business activities, also constitute illegal financial activities. Domestic staff of relevant overseas virtual currency service providers, as well as domestic institutions and individuals who knowingly or should have known that they are engaged in virtual currency-related business and still provide services to them, will be held legally accountable.

II. Relevant institutions are prohibited from engaging in business related to virtual currencies or real-world asset tokens.

Member institutions are prohibited from participating in the issuance and trading of virtual currencies and real-world asset tokens within China, and from directly or indirectly providing related services to clients for the issuance and trading of virtual currencies and real-world asset tokens within China. Banking and payment institution members are prohibited from providing services for business activities related to the issuance and trading of virtual currencies and real-world asset tokens within China, and from providing any form of financial services and credit support to virtual currency "mining" enterprises and projects. They must strictly conduct due diligence on clients, promptly assess whether there are risks related to virtual currency or real-world asset token trading or money laundering, ensure that their business operations comply with regulatory requirements, and take measures according to procedures and report any suspicious clues to relevant departments. Securities, fund, and futures institution members are prohibited from providing services for the issuance and trading of virtual currencies, real-world asset tokens, and related financial products within China. Internet platform enterprise members are prohibited from providing any form of marketing, promotion, information technology, or other services for business activities related to the issuance and trading of virtual currencies and real-world asset tokens within China, and must effectively conduct compliance checks on information published on their platforms. All member institutions should conduct multi-faceted risk warnings and education regarding virtual currencies and real-world asset tokens, reminding the public to identify risks and stay away from illegal activities.

Third, the public should be highly vigilant against all forms of virtual currency and real-world asset tokenization activities.

Cryptocurrency prices fluctuate wildly and are often used for speculation, pyramid schemes, and other illegal activities. The public is urged to enhance their risk awareness and ability to identify such activities, protect their finances, and refrain from participating in any activities related to cryptocurrencies or real-world asset tokens, as well as illegal fundraising and securities issuance activities conducted under the guise of cryptocurrency "mining." Stay away from cryptocurrencies and real-world asset tokens to avoid involvement in related illegal and criminal activities. Be wary of joining communities promoting cryptocurrencies or real-world asset tokens, and be cautious of false advertising containing historical returns, trading advice, or speculative prospects. Refuse to click on links or QR codes leading to overseas cryptocurrency or real-world asset token trading platforms. If you discover any clues related to cryptocurrencies or real-world asset tokens, report them to the relevant regulatory authorities immediately. If any illegal or criminal activity is suspected, report it to the police.