Interpreting the State Council's Financial Work Report: Is RWA an Illegal Financial Activity?

Author: Liu Honglin

According to news reports, on November 3, Pan Gongsheng, Governor of the People's Bank of China, was entrusted by the State Council to report to the 25th session of the Standing Committee of the 14th National People's Congress on financial work since October 2025. The report covered monetary policy, financial reform, and risk handling as usual, but one passage on virtual currencies and RWA needs to be read word by word:

Improve the regulatory policy framework for virtual currencies, strengthen intelligence analysis of underground banking clues involving virtual currencies, improve a full-chain, normalized mechanism to rectify virtual currency 'mining,' and strengthen oversight of real-world asset (RWA) tokenization.

Image: State Council report on financial work, reposted from the People's Bank of China.

RWA (Real World Assets) is a business model that maps real-world assets such as real estate, bonds, and carbon assets on-chain for issuance and circulation. It has long been a carefully used term in regulatory language over the past few years.

Its inclusion in the State Council's financial work report has led to two market readings: some see tightening, expecting regulators to step up enforcement; others interpret it in the opposite direction, asking whether putting it in such a formal document signals rules and a compliant path.

Both readings may miss the same fact: the real change this time is who regulates RWA and how.

First, consider where this passage appears.

In the first part of the report, 'Major Progress and Achievements in Financial Work,' there is a section titled 'Preventing and Resolving Financial Risk Hazards.' This passage appears there, alongside cluster crackdowns on 'black and gray industry' crimes in the financial sector and a nationwide special campaign against illegal fundraising. The subheading for this item is 'Strengthening the Capacity and Mechanism for Preventing and Combating Illegal Financial Activities.'

The placement itself is a regulatory classification: RWA has been categorized among the illegal financial activity risks to be prevented and combated, not among financial innovation and opening-up agendas.

How RWA Entered Routine Regulation

RWA is not the first time regulators have named it. In February this year, the People's Bank of China and seven other departments jointly issued the 'Notice on Further Preventing and Handling Risks Related to Virtual Currencies and Other Matters' (Yinfa [2026] No. 42), for the first time listing RWA tokenization alongside virtual currencies as risk-handling targets. In the State Council's report implementing deliberation opinions, this approach was summarized as 'strict prohibition domestically and strict oversight overseas.'

At the enforcement level: enterprise and individual business names and business scopes may no longer include terms such as 'RWA' or 'real-world asset tokenization'; internet platforms may not provide premises, display, marketing, or traffic redirection for related businesses; financial institutions and payment institutions may not provide account opening, fund transfer, or clearing and settlement services.

That notice addressed the 'blocking' problem by shutting down domestic business channels one by one.

The change in this November report is that RWA is placed alongside intelligence analysis of underground banking clues and full-chain rectification of mining, and written into the State Council's annual report to the National People's Congress, specifically in the section summarizing work over the past year. For regulators, this is already routine enforcement.

In other words, RWA is no longer just a new term in a special notice; it has been incorporated into the routine agenda of financial regulation. Going forward, constraints on such businesses will not require separate documents; routine supervision and enforcement actions will cover them.

Is Technology Services No Longer Neutral?

The practical impact of this change for practitioners lies in regulatory jurisdiction.

Over the past year or so, many clients have asked about RWA. Their structures were mostly similar: the underlying assets were real estate, debt claims, carbon assets, or equipment revenue rights, wrapped in a technology services or data-on-chain layer. Issuance and fundraising were rephrased in an attempt to define the whole activity as technology or data business and avoid financial regulation.

After Document No. 42, such packaging was already strained; this report removes the remaining room for imagination.

Once assets are put on-chain, the issuance, trading, and settlement are clearly within the financial regulatory framework. The assessment returns to the simplest factors: where the money comes from, where it goes, who promises returns, and whom the promotion targets. No matter how sophisticated the structure, if these factors point to public fundraising and return promises, the claim 'we only provide technology' will not help.

Another detail in the report is easily overlooked: strengthen intelligence analysis of underground banking clues involving virtual currencies.

This targets the fund repatriation channel. Some teams place issuance offshore, assuming an offshore structure insulates them from domestic regulation. But as long as promotion targets domestic users and returns flow back onshore through exchange channels, it falls squarely on this line.

Strict overseas oversight is not about the place of registration; it is about where users are and how money moves.

In the same report, there is another statement worth reading side by side. In the section titled “Financial Reform and Opening Up,” placed alongside cross-border payment connectivity, RMB swap arrangements, and panda bonds, is this sentence: the positioning of digital RMB has been smoothly shifted from cash to deposit money.

One is written in “Preventing and Combating Illegal Financial Activities,” and the other in “Financial Reform and Opening Up.” The section placement itself reflects regulators' classification of the two on-chain pathways.

This shift was completed earlier this year. Pan Gongsheng publicly confirmed it at the October Financial Street Forum Annual Meeting. Its inclusion in this report means it has moved from a pilot arrangement to an established framework.

This issue may seem unrelated to RWA, but in fact it is the other side of the same strategic board.

The original positioning of digital RMB was a digital substitute for cash: interest-free, not entering the credit-creation system, and mainly used for small-value payments. After the shift to deposit money, digital RMB operated by bank-type operating institutions is included in deposit reserve management, real-name wallet balances can earn interest, and commercial banks can incorporate it into full-scenario services across deposits, loans, remittances, and investments.

The Digital RMB International Operations Center has already been exploring on-chain issuance, registration, custody, and fund settlement for assets such as commercial paper, trade finance instruments, and carbon emission rights. These are exactly the application stories that the RWA industry has repeatedly told in recent years.

Looking at the two tracks together, the direction becomes clearer: regulators have not denied the concept of putting assets on-chain itself. Domestic strict prohibition targets privately initiated, public-facing tokenized issuance; the digital RMB system is building an officially recognized on-chain asset track.

For private RWA, this is a two-way squeeze: on one side, prohibitive enforcement; on the other, replacement by official infrastructure. The expectation that regulators will first block and then reopen, allowing private issuance to regain a foothold, has at least no basis in this report.

How should RWA business teams view this?

For teams currently doing or preparing to do RWA-related business, Honglin Lawyers' assessment has three layers.

For domestic business, do not continue to package issuance and fundraising activities under the names of technology services or on-chain data. Regulators have clearly treated such business as financial activity; packaging will only increase the cost of post-hoc explanation and cannot change the classification.

For offshore issuance, first understand how it is regulated. Article 14 of Document No. 42 has drawn a regulated path: tokenization businesses conducted offshore, based on ownership or income rights of domestic assets, that resemble asset securitization and have equity-like characteristics, shall be strictly supervised by the NDRC, CSRC, and SAFE according to their respective responsibilities under the principle of “same business, same risk, same rules.” The regulatory guidelines issued by the CSRC the same day require domestic enterprises controlling the underlying assets to first file with the CSRC, and intermediary institutions providing services must also seek approval or make filings. In other words, the offshore route is not impossible; it must follow the filing path. Bypassing this path, promoting to domestic users, and returning proceeds through exchange channels falls exactly on the line of leads on underground banks; placing the structure offshore has never been a safety cushion.

In terms of pace, there is no need for panic, but plans should be made according to the direction. The report is currently a policy statement, with no accompanying specific rules or effective date yet; ongoing business does not need to immediately adjust processes based on it. But if your business model is built on the assumption that “regulators will eventually open domestic tokenized issuance,” this report indicates that this assumption does not hold within a visible horizon. The positions that still have opportunities are those that do not touch funds or issuance: technology services, compliance tools, custody and audit, data services, and directions connecting to official tracks.

Summary

The RWA story has not ended; only the right to tell the story has changed hands. In recent years, the industry has been accustomed to framing tokenization as technology reshaping the financial system. The answer this report gives is that, within China's framework, putting assets on-chain must either go through a regulator-recognized track or there is no track at all.

Source: 深潮 TechFlow