Analysis of RWA Projects and Compliance Discussion

Recently, RWA (Real World Assets) projects have become a hot topic in the Web3 field. Many observers believe that RWA will reshape the financial ecosystem in Hong Kong, but there is controversy within the industry regarding compliance issues. This article aims to clarify the concept of RWA and explore its compliance boundaries.

1. Definition of RWA

RWA is a financing project that tokenizes real assets through blockchain technology. A true RWA project should have the following characteristics:

1. Based on real assets
2. Asset Tokenization on Chain
3. Digital assets have ownership value
4. Token issuance and circulation comply with legal regulations and are subject to administrative supervision.

RWA projects are mainly divided into two categories:

1. Narrow RWA: Physical assets on-chain
2. STO( Security Token Offering ): Financial Assets On-chain

Different countries and regions have different criteria for the identification of security tokens, mainly based on the local securities regulations' definition of "securities."

2. RWA Project "Compliance" Layering

The compliance of RWA can be divided into four levels:

1. Sandbox Compliance: such as the Hong Kong Monetary Authority's Ensemble sandbox project
2. Hong Kong Administrative Supervision Compliance: Managed under the STO framework
3. Clear regulatory framework in crypto-friendly regions
4. "Pan Compliance": Temporarily not recognized as non-compliant in specific regions.

Currently, most RWA projects find it difficult to achieve the first two types of Compliance and are trying the third path. If Hong Kong can explore RWA secondary market mechanisms, it will be a key breakthrough.

3. Lawyer Recommendations for RWA Projects

1. Choose a policy-friendly jurisdiction
2. Ensure that the underlying assets are real and redeemable.
3. Obtain investor recognition
4. Ensure that the institutional operations in the chain are in compliance.
5. Preventing Post-Compliance Risks
6. Pay attention to brand reputation management

4. Conclusion

The RWA project types are diverse and need to be classified for observation. The current biggest challenge lies in the uncertainty of the system, and "practical standards" should be explored. At the same time, existing legal and regulatory frameworks must be respected, as this is a basic premise for innovation.