RWA Asset Tokenization: Development and Regulation of Innovative Financing Methods

With the development of blockchain technology, the global asset tokenization process is accelerating. Data shows that by April 2025, the total value of on-chain RWA assets will exceed $22 billion. Deloitte predicts that the tokenized real estate market will reach $4 trillion by 2035.

In this wave of financial innovation, Hong Kong has become a pioneer in the compliant development of the RWA sector due to its institutional advantages. From charging pile assets to Asia's first compliant tokenized fund, the implementation of multiple benchmark projects has validated the immense potential of this innovative financing method in the field of physical assets.

The Essence and Advantages of RWA

RWA, or Real World Asset tokenization, is an innovative financial model based on blockchain technology. It maps physical assets or financial assets onto the blockchain, transforming them into digital tokens with high liquidity and divisibility.

The main advantages of RWA include:

1. Activate heavy asset financing scenarios that are difficult for traditional finance to reach, lowering the investment threshold.
2. Reduce financing costs and improve financing efficiency
3. The trading structure can be customized according to needs, increasing flexibility.
4. Achieve effective separation between "corporate credit" and "asset credit".
5. Forming a positive feedback development model for on-chain and off-chain collaboration.

Currently, financial asset tokenization products in the RWA sector are developing rapidly, with a typical example being BlackRock's BUIDL tokenization fund. As various RWA products are implemented, they will attract more traditional investors, driving the rapid development of the entire ecosystem.

Hong Kong's RWA Regulatory Framework

The Hong Kong Securities and Futures Commission adopts the "principle of transparency", focusing on the financial attributes of the real assets corresponding to the Token, reflecting the concept of "same industry, same risk, same rules". The main regulatory documents include:

1. Circular on the Tokenization of Investment Products Recognized by the Securities and Exchange Commission
2. Circular on Intermediaries Engaging in Tokenization of Securities Related Activities
3. Monetary Authority "Ensemble Project"

These documents clarify the regulatory standards for tokenized securities and provide normative guidance for the development of the RWA market.

Compliance Points for Mainland Enterprises Conducting RWA in Hong Kong

Due to the mainland's ban on token issuance, mainland enterprises need to issue RWA products overseas (, such as in Hong Kong ). The main compliance points include:

underlying asset compliance

1. Asset Confirmation: Ensure clear legal ownership of underlying assets.
2. Asset Audit: Hire a professional organization to conduct an asset audit and evaluation.
3. Asset divestiture: Achieving risk isolation of underlying assets through SPV structure.

Data On-Chain Compliance

Adopt the "Two Chains and One Bridge" model:

• Onshore alliance chain evidence asset data
• Issuance of RWA tokens on foreign public chains
• Achieve mapping and binding through cross-chain bridges

Cross-border data can also be put on the chain using the Hainan Free Trade Port cross-border data flow pilot zone.

Compliance of capital circulation

Design the framework for overseas fund collection and circulation, with main funding channel options including:

• QFLP( Qualified Foreign Limited Partner )
• FDI( Foreign Direct Investment Enterprises )
• QFII( Qualified Foreign Institutional Investor )

The architectural design needs to comprehensively consider factors such as tax burden, thresholds, procedures, and costs.

In summary, RWA is rapidly developing as an innovative financing method, but the implementation of projects still requires careful consideration of various compliance requirements and steady progress with the support of a professional team.