Chinese and South Korean authorities have introduced new restrictions on cryptocurrency activities, signaling heightened regulatory pressure on the digital asset industry. According to Reuters, the China Banking and Insurance Regulatory Commission (CBIRC) has quietly instructed several local brokers to suspend their real-world asset (RWA) tokenization businesses in Hong Kong. While the move has not been publicly announced, insiders report that the goal is to strengthen risk management and ensure that tokenized projects are backed by tangible economic activity.
This stance stands in stark contrast to Hong Kong’s pro-crypto policies. Over the past year, the city has positioned itself as an emerging hub for digital assets and blockchain innovation, while mainland China has maintained a strict ban on cryptocurrency trading and mining since 2021. The divergence underscores the political and regulatory tension between the mainland and Hong Kong regarding the future of the crypto economy.
Industry data highlights the stakes. According to RWA.xyz, the global market for tokenized real-world assets has already reached $28 billion in 2025, showing strong institutional and retail interest. For Beijing, limiting broker participation in RWA projects is a signal of caution, reflecting concerns about speculative risk and potential exposure to financial instability.
Meanwhile, South Korea is grappling with record levels of suspicious crypto transactions. Between January and August 2025, local virtual asset service providers (VASPs) filed 36,684 suspicious transaction reports (STRs)—a figure that exceeds the total for both 2023 and 2024 combined. Most of these reports involve “hwanjigi,” an illegal scheme to transfer foreign currency abroad. Criminal groups typically convert illicit profits into cryptocurrencies, channel them through offshore platforms, and later cash out via domestic exchanges in Korean won.
The scale of the problem is significant. From 2021 through August 2025, Korea’s Customs Service referred cases of crypto-related crimes totaling $7.1 billion to prosecutors. A striking 90% of these cases (about $6.4 billion) were linked to hwanjigi schemes. As a result, officials are calling for tighter oversight and improved mechanisms to track illicit crypto flows in order to disrupt money laundering networks.
Conclusion:
The latest developments in China and South Korea’s regulatory landscapes highlight a growing divide in Asia’s crypto strategy. While Hong Kong is pushing to become a regional hub for tokenized assets, Beijing is clamping down on RWA activities to minimize systemic risk. At the same time, Seoul’s rising wave of suspicious crypto transactions underscores the urgent need for stronger compliance, monitoring tools, and cross-border cooperation. The message is clear: as the crypto industry matures, regulators in Asia are taking decisive steps to balance innovation, financial security, and crime prevention.
