Introduction

Recently, I have been deeply involved in several real-world asset (RWA) tokenization projects and have conducted in-depth research on related businesses in practice. To facilitate readers' understanding, this article will share some of our core observations and thoughts in a Q&A (FAQ) format.

Q1: Why has RWA become popular recently?

The fundamental reason for the hot demand for RWA is the official implementation of the "Stablecoin Regulation" in Hong Kong on August 1, 2025. This marks the comprehensive compliance of stablecoins as anchor currencies for transaction settlement. Against the backdrop of the Hong Kong government's strong support for the compliant issuance of virtual assets, a legal and compliant framework for the virtual asset market has already taken shape.

From the market motivation perspective, many enterprises expect Hong Kong RWA to open up a new compliant financing channel, and some listed companies also hope to boost market confidence and stock prices by laying out in this track. This expectation shares similarities with some market sentiments during the early ICO boom.

Q2: What is the difference between Hong Kong RWA and Web3 RWA?

The difference is very significant, and there is even no direct business connection between the two.

The core of RWA in Hong Kong is "full-link compliance." The underlying assets need to meet the legal requirements of both regions, namely the compliance of the asset's location (such as the mainland) and the compliance of Hong Kong. This compliance requirement is far from being satisfied by the technical level of "consortium chain confirmation"; it must be established on documents with clear legal effect. For example, data assets need to complete compliance exit filings, while physical assets need to go through compliance procedures for outbound transfer.

There is a common assumption in the market that, for example, after the on-chain confirmation of property rights in mainland China, RWA could be issued in Hong Kong. However, under the current framework, this path is completely unfeasible. First, the Hong Kong Securities and Futures Commission (SFC) explicitly prohibits automated matching transactions on-chain; secondly, the complete transfer of property rights of mainland real estate to Hong Kong faces enormous legal and practical obstacles.

Currently, the forms of RWA officially encouraged by the Hong Kong Monetary Authority (HKMA) primarily focus on stablecoins and tokenized bonds (such as government-issued green bonds). The operational model for a broader range of physical RWAs is still unclear, but it is certain that regulators do not accept models that issue assets solely based on blockchain certification; assets must be fully placed under Hong Kong's regulatory framework.

Therefore, Hong Kong RWA places greater emphasis on its nature as a "regulated distributed ledger" in the application of blockchain technology, rather than the global free trading and circulation pursued by Web3 RWA.

Q3: How to Understand Hong Kong RWA in Simple Terms?

At the current stage, Hong Kong RWA can be understood as a "futures market that allows private compliance issuance."

Just as crude oil futures require designated storage locations to hold and deliver physical crude oil, Hong Kong RWA also requires that its underlying assets must be in a state that can be effectively regulated by Hong Kong financial regulatory authorities. If the underlying physical assets of an RWA cannot be regulated, it is highly unlikely to be approved for issuance. For example, creating an RWA based on rental income from properties outside Hong Kong is unlikely to be approved because both the properties themselves and the leasing contracts cannot be directly regulated by Hong Kong authorities.

On the contrary, some intangible assets, such as entertainment copyrights, have a greater possibility. As long as these assets have clear and compliant ownership under mainland laws and can legally transfer their rights to a regulatory entity in Hong Kong, their future income may be used to issue RWA.

It is worth noting that the Hong Kong government does not currently mandate that the underlying assets of RWA must be located within Hong Kong; the core requirement is that the assets can be "regulated by the Hong Kong government." Based on this, the author predicts that even if a high-quality asset is not in Hong Kong, there is still a possibility of approval for issuance if it can provide a complete set of credible evidence that meets Hong Kong regulatory requirements (for example, a continuous audit report issued by one of the "Big Four" accounting firms).

Q4: Can RWA be traded once it is issued?

No. Issuing RWA and trading RWA are completely independent matters.

The issuance of RWA is more akin to a fundraising activity. Once the issuance application is approved, the issuer can raise funds from "qualified investors" (Professional Investor). However, this does not mean that the tokens can be publicly traded.

To execute transactions, according to the regulatory red lines set by the Hong Kong Securities and Futures Commission (SFC), RWA tokens are strictly prohibited from being traded via automated matching on the blockchain. The only pathway is to apply for listing on a licensed virtual asset trading platform (VASP) in Hong Kong.

In addition, these compliant virtual asset trading platforms are only open to qualified investors, which essentially eliminates the possibility of attracting a large number of retail investors through community marketing hype, in stark contrast to the operational models of certain crypto assets (such as Meme coins). At the same time, listing and trading on compliant platforms is expected to incur substantial costs.

Q5: What about the issuance of compliant stablecoins in Hong Kong?

Among all RWA categories, the feasibility of issuing compliant stablecoins is the highest, especially stablecoins issued based on high-quality assets such as Hong Kong dollars, offshore renminbi, US dollars, or high credit rating bonds.

Of course, the threshold is also very high. Without discussing the complex compliance processes, just the cost of funds alone constitutes a very high entry barrier for the vast majority of startups. According to the "Stablecoin Regulation," the issuing entity needs to actually pay in at least 25 million Hong Kong dollars as paid-in capital and is subject to centralized supervision by the Monetary Authority. In addition, the issued stablecoin must have 100% high-quality liquid assets as reserve support.

Q6: Can consortium blockchain technology be used to issue Hong Kong RWA?

This is a major misconception that has been common recently. The application scenarios of domestic consortium chains (such as rights confirmation and traceability) are completely unrelated to the compliance requirements of RWA in Hong Kong, yet some business leaders we encounter often confuse the two.

The legal validity of the Hong Kong RWA project entirely depends on the clarity of ownership and the authenticity of the underlying assets. According to the analysis of legal experts in Hong Kong, issuers must fulfill strict due diligence obligations, including:

1 Legal Document Verification: Confirm that the asset is free of any rights encumbrances through property registration documents, judicial statements, etc.

2 Financial Penetrating Audit: Entrust licensed auditing institutions to verify the cash flow, liabilities, and other assets to prevent financial fraud.

3 Independent Third-Party Valuation: For non-standard assets, valuation endorsement must be conducted by independent appraisal institutions using multiple models.

In short, the Hong Kong RWA project only recognizes legally binding documentations and the review results from licensed third-party institutions, completely rejecting the technical aspect of "on-chain confirmation of rights" as the basis for legal validity.

Q7: What is the purpose of issuing RWA in Hong Kong?

In the author's opinion, for legitimate enterprises, its core functions are mainly twofold: first, to expand new compliant financing channels for quality assets; second, for publicly listed companies, it can serve as a positive signal to boost market confidence.

However, it must be noted that there are many participants in the current market who treat RWA as a speculative narrative. Their true intention may not be to complete compliant issuance, but rather to use this hot concept for private financing or market speculation. Such phenomena are not uncommon in the industry, and investors and practitioners should be highly vigilant.

Summary

In summary, Hong Kong RWA is a very new field, with only a handful of successful cases. Therefore, the viewpoints presented in this article may still have limitations, and the author will continue to update their understanding as they gain deeper insights into the business. This article serves merely as a personal record of insights at the current juncture, hoping to provide some valuable references for colleagues interested in this field.