(Bloomberg) -- China Banking and Insurance Regulatory Commission issued a warning Friday against illegal fundraising schemes being tied to the metaverse.

The admonition comes amid booming Chinese activity in the digital sector that seeks to blend virtual reality, gaming and social media. Beijing appears to have already allowed metaverse projects despite the concept’s association with gaming and cryptocurrencies. China has essentially banned cryptocurrencies and blockchain games that have tokens. 

The state-owned telecommunications conglomerate China Mobile established a Metaverse Industry Committee last October, while China’s tech giants such as Tencent Holdings Ltd. and Alibaba Group Holdings Ltd. have filed trademarks related to the concept in recent months.

“We may be seeing a bifurcation of metaverse tech and virtual assets trading as we have already seen in the blockchain industry in China,” said Winston Ma, a New York-based managing partner of CloudTree Ventures, which invests in gaming, esports and AR/VR technologies.

The regulator does not mention nonfungible tokens (NFT) or blockchain games by name, which could be the intersection of crypto and the metaverse, it touches upon common investment concepts commonly used in these two spaces.

“Some criminals tie the metaverse concepts with their projects and introduce ‘earn money while playing games’ and ‘high yields with short cycles’ concepts to lure people to invest by trading virtual currencies and assets in the games,” the regulator said, noting virtual real estate is another scheme used by fraudsters. 

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