State Council Financial Report Proposes Strengthening Regulation of Real-World Asset (RWA) Tokenization / Hong Kong SFC Proposes Restricting Unauthorized Institutions' Use of Crypto Titles / Former FBI Agent Admits to Stealing Approximately USD 2.47 Million in Crypto Assets

Pan Gongsheng, Governor of the People's Bank of China, entrusted by the State Council, reported on financial work since October 2025 at the 25th session of the Standing Committee of the 14th National People's Congress, in which he proposed strengthening regulation of real-world assets (RWA) tokenization and improving the virtual currency regulatory policy framework. The report also noted that the positioning of the digital renminbi is being smoothly switched from cash to deposit money. In the area of preventing and resolving hidden financial risks, the report mentioned launching a new round of cluster crackdowns on illegal and quasi-illegal criminal activities in the financial sector, and completing nationwide deployment of work related to combating illegal activities. The available material is an excerpt; the report does not provide further explanation of the specific measures, timetable or current stage of regulation of RWA tokenization and virtual currencies.

Business impact

By placing RWA tokenization and virtual currency regulation side by side within financial work deployment, the report means that domestic business involving the on-chain issuance, trading or settlement of assets will fall more within the financial regulatory framework rather than being treated solely as technology or data business. The shift in the positioning of the digital renminbi from cash to deposit money will change the monetary aggregate classification of assets denominated and settled in digital renminbi, and in turn affect the custody and settlement arrangements for the funds of relevant products. The above content currently consists of policy statements in the report; no specific rule text or effective date has yet been indicated, and institutions should not adjust specific business processes on this basis for the time being.

Key points to watch

• Specific measures and timetable for regulation of RWA tokenization in the report
• Scope of revision and issuing authority of the virtual currency regulatory policy framework
• Applicable rules after the digital renminbi is converted to deposit money

The Securities and Futures Commission (SFC) of Hong Kong has published a consultation conclusion proposing amendments to the Securities and Futures Ordinance and the Anti-Money Laundering and Counter-Terrorist Financing Ordinance to restrict unauthorized institutions from using certain designations that may lead the public to mistakenly believe their business is regulated by the SFC or is associated with exchanges, clearing houses and virtual asset trading platforms. The designations proposed to be restricted include "crypto", "cryptocurrency", "crypto coin", "digital" and others, with the specific list subject to the consultation conclusion. The relevant amendments remain subject to completion of the legislative process and will take effect six months after the provisions are passed. The available materials are excerpts, and the complete list of restricted designations and details of their scope of application remain insufficient.

Business impact

The proposed restrictions target the use of designations in institutions' names and promotional materials, and bind market participants that use restricted designations without SFC authorization, with the consequence that they may be found to have misled the public into believing they are regulated or associated with licensed platforms. Institutions whose names, brands and marketing materials contain the relevant terms need to assess, before the legislation is passed and the six-month period for effectiveness expires, whether they fall within the restricted scope; the amendments have not yet taken effect and do not currently constitute immediate obligations.

Key points to note

• Check the complete list of restricted designations set out in the consultation conclusion
• Confirm whether you are a restricted entity without SFC authorization
• Arrange adjustments to names and promotional materials using the six-month period after the provisions are passed as the effective date

A U.S. Department of Justice announcement shows that former Federal Bureau of Investigation (FBI) agent Patrick Steven Yaroch pleaded guilty on November 5 to wire fraud and money laundering. He used his official access to obtain crypto asset credentials collected in FBI investigations and carried out approximately 100 fraudulent transfers involving 35 separate investigations, obtaining illicit proceeds of approximately US$2.4744 million. Court documents show that the stolen assets came from investigation subjects, wallets controlled by hostile state actors, and at least one wallet created by the FBI for an operation; he concealed the source of the funds through currency exchanges and multiple transfers, and used part of the funds to repay personal debts. The Department of Justice stated that his conduct harmed multiple investigations and related intelligence sources and methods. Sentencing in the case is scheduled for March 4, 2027, and he faces a maximum of 20 years' imprisonment.

Business impact

The persons constrained in this case are insiders with access to crypto assets seized or held by law enforcement: Yaroch's authority derived from credentials collected in the FBI investigation, and his conduct was characterized as wire fraud and money laundering rather than mere embezzlement, indicating that access to wallet private keys or credentials obtained in an investigation itself constitutes a regulated legal relationship. For exchanges, custodians and on-chain analytics service providers, once wallet control arising in the course of law-enforcement handover or investigative assistance lacks dual review and an operational audit trail, the conduct of the relevant employees may simultaneously trigger both fraud and money-laundering charges and expose the institution to contamination of the evidentiary chain and disclosure of investigative intelligence sources. The case is currently at the post-plea sentencing stage; the maximum 20-year term of imprisonment is the statutory maximum, and the actual sentence has not yet been determined.

Key points to watch

• Verify the authority and dual-review records of personnel with access to wallet private keys or credentials handed over by law enforcement
• Confirm that operation logs and transfer records for assets obtained in the course of assisting an investigation are fully traceable

The U.S. Department of the Treasury announced financial sanctions against 8 Canadian money services businesses, alleging that they provided financial services to sanctioned Iranian entities and assisted in exchanging currencies such as the Iranian rial into crypto assets for cross-border transactions. The U.S. Department of the Treasury stated that the institutions involved facilitated transactions with sanctioned Iranian crypto exchanges and digital asset addresses associated with Iran's Islamic Revolutionary Guard Corps (IRGC). U.S. Treasury Secretary Scott Bessent said that Canada cannot be a safe haven for illicit financial intermediaries evading sanctions, and that the United States will cut off the Iranian regime's funding networks worldwide. This sanctions action was carried out jointly with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

Business impact

By adding these 8 Canadian money services businesses to the sanctions list, the U.S. Department of the Treasury's direct consequence is that these institutions' assets within the United States are frozen, and U.S. persons are also restricted from transacting with them; for money services businesses still licensed and operating in Canada whose customers or counterparties are involved in Iranian rial exchange and cross-border flows of crypto assets, sanctions risk no longer depends on whether they are lawfully registered in Canada, but on whether the funds chain touches sanctioned Iranian exchanges or IRGC-linked addresses. The joint action with FINTRAC means that local Canadian suspicious transaction reports and customer due diligence records may simultaneously become the basis for U.S. determinations, and exchangers involved in Iran-related business need to reassess, based on counterparty and address screening results, whether they fall within the scope of the sanctions.

Key points to watch

• Verify whether the client and counterparties involve sanctioned Iranian exchanges or IRGC-linked addresses
• Confirm whether the entity itself is among the eight Canadian money services businesses listed on the U.S. sanctions list
• Review suspicious transaction reports and customer due diligence records related to FINTRAC