The Rise of RWA: The Global Trend of Asset Tokenization

The tokenization of global assets is showing a trend of accelerated development. According to data platforms, as of April 2025, the total value of on-chain RWA assets has surpassed 22 billion USD. Deloitte predicts that the market size of tokenized real estate will reach 4 trillion USD by 2035.

In this wave of financial innovation, Hong Kong has quickly become a pioneer in RWA compliant development due to its unique institutional advantages. From the tokenization project of charging pile assets by Longxin Group to the launch of Asia's first compliant tokenized fund by China Universal Asset Management, multiple benchmark cases have successfully landed, confirming the application potential of this innovative financing method in the field of physical assets.

1. The essence of RWA

RWA(Real World Assets) refers to the tokenization of real-world assets, an innovative financial model based on blockchain technology. It maps physical or financial assets onto the blockchain, transforming them into highly liquid and divisible digital tokens. This process not only achieves a digital representation of assets but also provides unprecedented transparency and traceability to assets through blockchain.

From a legal compliance perspective, RWA is actually a broad concept with no standard answer. All processes of asset tokenization realized through blockchain can be referred to as RWA.

2. Advantages of RWA

1. Activate heavy asset financing scenarios that are difficult for traditional finance to reach.

The RWA model combines blockchain technology to divide heavy assets such as real estate and infrastructure revenue rights into highly liquid digital tokens, opening up new financing channels for these previously "dormant" assets. For investors, the divisibility of tokens significantly lowers the investment threshold.

2. Reduce financing costs and improve financing efficiency

Compared to the strict review of traditional securities issuance, the RWA model bypasses lengthy processes and reduces financing costs. Enterprises can flexibly design profit distribution, redemption mechanisms, and more based on their needs, enhancing the targeting of financing.

3. Achieve the separation of "company credit" and "asset credit"

RWA leverages blockchain technology, allowing for asset-backed financing even when the issuer's credit is average, as long as the underlying assets are of high quality. This positive feedback development model of on-chain and off-chain collaboration is a unique advantage of RWA compared to traditional financing.

Three, Hong Kong RWA Regulatory Framework

The Hong Kong Securities and Futures Commission adopts the "principle of transparency", focusing on the financial attributes of tokens corresponding to actual assets, reflecting the concept of "same business, same risks, same rules". The main regulations include:

1. The "Circular on Tokenization of Investment Products Recognized by the Securities Regulatory Commission" clarifies the regulatory requirements for security tokens.

2. The "Circular on Intermediaries Engaging in Tokenization Securities Related Activities" emphasizes that tokenization securities must comply with existing securities regulations.

3. The Monetary Authority "Ensemble Project" explores the application scenarios of tokenization technology.

Four, Compliance Points for Mainland Enterprises' Hong Kong RWA Projects

Due to the mainland's prohibition on Token issuance for financing, RWA projects must be issued overseas (, such as in Hong Kong ). The main compliance points include:

1. Compliance of underlying assets

• Asset confirmation: Ensuring clear and legal ownership
• Asset Audit: Assess market value, risks, etc.
• Asset divestiture: Achieving risk isolation through SPV

2. Data On-Chain Compliance

• Adopt the "two chains and one bridge" model or the Hainan Free Trade Data Port plan.
• Pay attention to the compliance of data collection, storage, desensitization and other stages.

3. Compliance of Fund Circulation

• Design a framework for overseas fund collection ( such as QFLP, FDI, QFII, etc. )
• Consider factors such as tax, entry barriers, and compliance costs.

In the process of advancing RWA projects, a professional legal team is required to ensure compliance throughout, ensuring that all aspects of underlying assets, data circulation, and capital flow are legal and compliant.