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, the Governor of the People's Bank of China, reported on the financial work situation since October 2025 to the 25th meeting of the Standing Committee of the 14th National People's Congress on behalf of the State Council. The report typically covers monetary policy, financial reform, and risk management, but there is a segment regarding virtual currencies and RWA that needs to be examined word by word:

"Improve the regulatory policy framework for virtual currencies, strengthen the investigation of underground money laundering related to virtual currencies, establish a normalized mechanism for the comprehensive rectification of virtual currency 'mining', and enhance the regulation of the tokenization of real-world assets (RWA)."

Figure: The State Council's report on financial work, reprinted from the People's Bank of China

RWA (Real World Assets) refers to the business model of mapping real-world assets such as real estate, bonds, and carbon assets onto the blockchain for issuance and circulation. It has been a term used cautiously in regulatory language over the past few years.

Now that it has been included in the State Council's financial work report, there are two interpretations in the market: some read it as tightening, believing that regulation is about to intensify; others interpret it in the opposite direction, thinking that being included in such a formal document means that rules are being established and a path is being set.

Both interpretations may overlook the same underlying fact: the real change this time is who is in charge of RWA and how it is regulated.

First, let’s discuss where this statement is located.

In the first part of the report, titled "Main Progress and Achievements in Financial Work," there is a section called "Preventing and Mitigating Financial Risk Hazards," where this statement is included. In the same paragraph, there are mentions of combating illegal activities in the financial sector and a national special action against illegal fundraising, with a subheading titled "Strengthening the Capacity and Mechanism for Preventing and Combating Illegal Financial Activities."

The position of this section itself categorizes regulatory classifications: RWA is classified as a risk of illegal financial activities that need to be prevented and combated, and it is not included in the agenda for financial innovation and opening up.

How RWA Became Part of Daily Regulation

RWA is not the first time it has been named by regulators. In February of this year, the People's Bank of China and eight other departments jointly issued a notice titled "Further Preventing and Addressing Risks Related to Virtual Currencies" (Yin Fa [2026] No. 42), which for the first time listed RWA tokenization alongside virtual currencies as subjects of risk management. In the report implementing the review opinions, the State Council summarized this stance as "strictly prohibited domestically and strictly regulated abroad."

In terms of execution: the names and business scopes of enterprises and individual businesses must no longer include terms like "RWA" or "tokenization of real-world assets"; internet platforms must not provide business premises, display, marketing, or traffic diversion for related businesses; financial institutions and payment institutions must not provide account opening, fund transfer, and clearing services.

That notice addressed the issue of "blocking" by closing off domestic business channels one by one.

The change in the November report is that RWA is now mentioned alongside investigations into underground money laundering and comprehensive rectification of mining, included in the annual work report from the State Council to the National People's Congress, and it is written in the section summarizing the work of the past year. For regulators, this has already become part of the daily execution.

In other words, RWA is no longer just a new term in a special notice but has been incorporated into the regular agenda of financial regulation. Future constraints on such businesses will not require special documents to signal, as daily regulatory and enforcement actions will cover them.

Is Technical Service No Longer Neutral?

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

Over the past year, many clients have inquired about RWA, with most proposals being similar: the underlying assets are real estate, debts, carbon assets, or equipment revenue rights, with a layer of technical services or data on-chain structure layered on top, attempting to define the entire matter as a technical or data business to circumvent financial regulation.

This packaging has already become quite strained after Document No. 42, and this report has eliminated the remaining space for imagination.

The issuance, trading, and settlement of assets on-chain are now clearly regulated within the financial framework, with the judgment criteria reverting to a few basic questions: where does the money come from, where does it go, who promises the returns, and who is the target audience. No matter how sophisticated the structure is, as long as these questions point to public fundraising and return promises, the claim of "we are just doing technology" will not help.

Another detail in the report that is easy to overlook is: strengthening the investigation of underground money laundering related to virtual currencies.

This sentence targets the capital return channels. Some teams place issuance offshore, believing that an offshore structure isolates them from domestic regulation, but as long as the promotion is aimed at domestic users and returns flow back domestically through exchange channels, it falls precisely within this line.

The strict regulation abroad does not concern the place of registration but rather where the users are and how the money flows.

In the same report, there is another statement that should be viewed in conjunction. In the section on "Financial Reform and Opening Up," alongside cross-border payment channels, RMB swap arrangements, and panda bonds, is this sentence: "The digital RMB's positioning has shifted from cash to deposit currency."

One is written in the section on "Preventing and Combating Illegal Financial Activities," while the other is in "Financial Reform and Opening Up," indicating regulatory classification of the two paths on the blockchain.

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

This matter seems unrelated to RWA, but in reality, it is another side of the same chess game.

The original positioning of the digital RMB was as a digital substitute for cash, non-interest-bearing, and not entering the credit creation system, mainly used for small payments. After switching to deposit currency, digital RMB held by banking institutions will be included in reserve management, and real-name wallet balances can earn interest, allowing commercial banks to incorporate it into all-scenario businesses of deposit, loan, exchange, and investment.

The international operation center of digital RMB is already exploring on-chain issuance, registration, custody, and fund settlement of assets such as bills, trade financing tools, and carbon emission rights, which are precisely the application stories that the RWA industry has repeatedly discussed over the past few years.

When looking at these two lines together, the direction becomes clearer: regulation has not denied the act of asset tokenization itself. Domestic prohibition blocks spontaneous, public-facing token issuance; the digital RMB system is constructing an official recognition of the on-chain asset track.

For private RWA, this is a dual squeeze: on one side is prohibitive disposal, and on the other is the official infrastructure as a substitute. Expecting regulation to first block and then open up, allowing private issuance to reopen, finds no basis in this report.

How Should RWA Business Teams View This?

For teams currently engaged in or preparing to engage in RWA-related businesses, lawyer Honglin's judgment has three layers.

For domestic business, do not package issuance and fundraising actions under the guise of technical services or data on-chain. Regulation has already clearly viewed such businesses as financial activities; packaging will only increase the cost of explanation afterward and will not change the classification.

For offshore issuance, first, clarify what the regulations entail. Article 14 of Document No. 42 delineates a regulated path: based on domestic asset ownership and income rights, conducting asset securitization-like, equity-natured tokenization businesses abroad will be strictly regulated by the National Development and Reform Commission, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange according to their respective responsibilities, following the principle of "same business, same risk, same rules"; the regulatory guidelines issued by the CSRC on the same day require domestic enterprises holding the underlying assets to file with the CSRC, and intermediary institutions providing services must also seek approval or file. In other words, going offshore is not prohibited, but it must follow the filing route. Bypassing this route, promoting to domestic users, and having returns flow back through exchange channels fall precisely within the investigation of underground money laundering; structures set up offshore have never been a safety net.

In terms of pace, there is no need to panic, but planning should be done according to direction. The report is currently a policy statement, and there are no accompanying specific rules and effective dates, so existing businesses do not need to adjust processes immediately based on this. However, if your business model is based on the assumption that "regulation will eventually loosen restrictions on domestic token issuance," this report indicates that this assumption is not valid within a visible timeframe. The real opportunities lie in areas that do not touch funds or issuance: technical services, compliance tools, custody auditing, data services, and directions that connect with official tracks.

Conclusion

The story of RWA is not over; it has merely changed narrators. Over the past few years, the industry has been accustomed to framing tokenization as a transformation of the financial system through technology; this report provides the answer that within the framework of China, asset tokenization must either follow a regulatory-approved track or it simply does not exist.