Written by: Shao Jiadian, Liu Honglin; Mankun
In the Web3 community of 2025, what it lacks the least is 'windfalls'. Following DeFi, NFTs, the metaverse, and memes, RWA has suddenly become the top trend—slogans like 'asset on-chain reconstructing the financial system' and 'trillion-dollar market new blue ocean' abound, various RWA industry associations, summits, alliances, and forums are proliferating like cancer cells, far outnumbering real RWA projects. Even the old man selling pancakes at the village entrance has heard that 'putting houses on-chain can sell globally', but sorry, today we must pour a basin of cold water: when you’re shouting 'RWA asset on-chain', you might not even understand what you’re talking about.
First, let's break the first myth: RWA is not a 'new species', it's just 'old money with a new ledger'.
Don't be fooled by the packaging of 'Web3 innovation'. The funds you buy on Alipay, the A-shares in stock software, and the bonds in bank apps are essentially all 'tokenization of real assets'—stocks are digital certificates of equity, funds are certificates of asset portfolio shares, and bonds are electronic records of claims. The only difference is that traditional financial tokens exist in centralized databases of banks and brokers, while RWA tokens exist in decentralized ledgers on the blockchain. It's like switching the ledger from Excel to Google Docs; the core is still bookkeeping, just the method has changed.
But now many people talk about this as if it's 'humanity's first discovery of fire': 'Wow! Blockchain has put assets on-chain!' Please, stocks have achieved 'asset tokenization' as early as the 17th century; they just used paper certificates back then, which later became electronic data. RWA is essentially 'tokenization 2.0', moving certificates from centralized databases to the chain, adding the characteristics of immutability and decentralized verification, but the underlying logic remains 'using digital certificates to represent rights'.
To give a straightforward example: If you buy Tencent's stock, the brokerage app shows you hold 100 shares; these 100 shares are the Tokens of Tencent's equity, stored in the brokerage's database. If Tencent issues RWA equity, you receive 100 Tokens on the blockchain, which essentially still represent those 100 shares, with the difference being that the Token can circulate on-chain while traditional stock can only be transferred at the exchange. So don't mythologize RWA; it doesn't 'create new assets', it merely 'replaces old assets with a cooler ledger'.
90% of people get the point wrong: The essence of RWA is not 'data on-chain', and even less is it 'assets on-chain', but 'rights certificates on-chain'.
Now there are all kinds of nonsense like 'data on-chain = assets on-chain' everywhere. Some say: 'I scanned the property certificate into a PDF and put it on the chain, so this house becomes RWA!' Wake up, you can upload 100 photos of the property certificate to the blockchain, but the house is still registered in the housing management bureau system, which has nothing to do with the on-chain data. Data is just information, but the core of an asset is 'rights'—you own the house not because you have a photo of the property certificate, but because your name is written in the housing management bureau's register, which is a right granted by law.
Some people still boast: 'Our Token is a 1:1 mapping of real assets; holding the Token means owning the asset!' What's the difference from a child playing house? If you draw a 'one million Tokens' and say it represents the convenience store downstairs, does that mean the store belongs to you? Any 'mapping' without legal endorsement is just castles in the air. The core of RWA is not to move the asset itself onto the chain (houses can't be moved, equity can't be moved), but to tokenize the 'rights certificate proving you own the asset'—for example, transforming legally recognized rights certificates like stocks, bonds, and property titles into Tokens on the chain.
Highlight: The essence of assets is 'rights', and the carrier of rights is 'legally recognized certificates'. Movable property relies on contracts and invoices, real estate relies on property certificates, equity relies on shareholder registers, and debt relies on debt contracts. What RWA should do is repackage these 'legally protected certificates' using blockchain technology, making the transfer of certificates more efficient and transparent, but the premise is: first, rights within a legal framework, then Tokens on the chain. If you bypass the law and directly talk about 'assets on-chain', you are simply being rogue.
Don't treat 'on-chain' as a holy grail: Without legal backing, RWA is just 'the emperor's new clothes'.
The blockchain circle loves to say 'code is law', but in the RWA field, law is the parent of the code. If you hold a Bitcoin private key, you own Bitcoin 100% because the 'rights' of Bitcoin are completely defined by blockchain code; however, RWA Tokens represent real assets, and the rights to real assets are determined by the laws of various countries. For example, if you buy an RWA Token representing a property in the US and the developer runs away, you cannot take your private key to sue in a US court—first, the US court must see: is this Token recognized as a legal rights certificate under local law? Do you qualify as a 'qualified investor' under US regulations? Did your purchase process comply with US securities regulations?
To give a more painful example: someone domestically put a house in Beijing 'on-chain', issuing 1000 Tokens, each representing 0.1% of the property.
However, under Chinese law, changes in property rights must be registered with the real estate registration center; the circulation of Tokens on the chain is not counted at all. If one day the owner sells the house, and the Token holder goes to court to protect their rights, the court will only look at the property certificate, not the blockchain record—because the law does not recognize the legality of such 'on-chain rights certificates'.
Thus, the core of RWA is not a technical issue, but a legal construction issue: how to make the Tokens on the chain recognized as valid rights certificates within the real legal system? This needs to solve three key problems:
1. Rights Anchoring: Tokens must correspond to rights protected by law in the real world (such as equity, debt, property rights), not just air.
2. Compliance Framework: The issuance process must comply with the regulatory requirements of the target market (such as SEC regulations in the US, financial regulation in Hong Kong, etc.), otherwise it is considered illegal securities issuance.
3. Dispute Resolution: When rights represented by Tokens are in dispute, can the legal system recognize the on-chain records as evidence, and can it protect the rights of holders?
Those who talk about RWA without considering the law are either uninformed novices or willfully ignorant scammers—after all, the slogan 'decentralization, global circulation' sounds much better than 'first deal with regulatory authorities'.
RWA is essentially a financial product; don't be blinded by the term 'decentralization'.
Many people hype RWA as a 'magical tool for disrupting finance', claiming it allows ordinary people to invest in overseas properties, top private equity, and artworks. But the truth is: RWA is just the tokenization of financial tools, and finance inherently carries geographical and regulatory constraints.
First, all RWAs are 'financial products'. Whether it's real estate mortgage bonds, corporate receivables, or fund shares, they are essentially tools for 'making money with money', and must comply with the core logic of financial regulation: protecting investors, preventing risks, and maintaining market stability. For instance, the US requires that investors purchasing RWA securities must be 'qualified investors', while China requires that financial products must undergo approval and cannot illegally raise funds from the public. Projects claiming 'anyone can buy RWA' are either engaging in illegal fundraising or playing a dangerous game of 'regulatory arbitrage'.
Secondly, the geographic nature of finance makes it difficult for RWA to achieve 'global circulation'. An RWA Token for a property issued in the US may be considered 'overseas securities' in China and cannot be sold to Chinese investors without approval; similarly, Chinese corporate bond RWAs may be unavailable for US investors due to regulatory restrictions. Even if global circulation is technically feasible, legal recognition remains a significant barrier—can you imagine a Chinese investor taking an on-chain Token to sue a defaulting American company in a US court? Not to mention the costs of cross-border litigation, just the question of 'does the US court recognize the legality of your holding the token' is a big issue.
More realistically, financial risks do not disappear simply because they are 'on-chain'. Credit risk, market risk, and liquidity risk in traditional finance still exist in RWA, and may even become more hidden due to 'decentralization'. For instance, an RWA project might issue Tokens backed by fraudulent assets; the immutable nature of the blockchain could make the scam even harder to uncover—after all, the data is real, but the assets are fake.
Beware of the 'RWA bubble': 99% of the discussions are just hot air, and the challenge lies in the 'final mile'.
The current RWA community resembles the ICO craze of 2017: various white papers flying everywhere, the number of intermediaries exceeds the number of real cases, and industry associations outnumber project teams. But very few can present compliant and operable RWA cases. Why? Because the implementation of RWA needs to cross three 'ghost gates':
Level One: Legal Compliance
This is the hardest level. Taking the US as an example, the SEC considers most RWAs as 'securities' that must comply with (securities law), register, or obtain exemptions, otherwise it is illegal. This means the project team needs to hire top legal teams and spend millions of dollars on legal documents, and also pass regulatory reviews. The situation is stricter domestically; any actions involving 'asset securitization' or 'financial product issuance' must be approved by financial regulatory authorities, and unauthorized issuance may be suspected of illegally absorbing public deposits.
Level Two: Asset Transparency
For RWA to gain investor trust, it must solve the 'authenticity of the asset' problem. For example, for a property RWA, does the on-chain Token truly correspond to a real property? Are the property rights clear? Is there a mortgage? This requires professional asset valuation, due diligence, and legal confirmation, not just relying on 'smart contracts executing automatically' as stated in the white paper. Many projects claim 'on-chain means confirmed rights', but in reality, property rights confirmation requires running around and the blockchain merely records the results; it cannot replace the offline legal processes.
Level Three: Investor Protection
Traditional finance has a mature investor protection mechanism, such as supervision by the Securities Regulatory Commission, bank custody, risk warnings, etc. But what about RWA? Under a decentralized structure, who supervises the project team? Who ensures the investors' right to know and right to redeem? If the Token price crashes, can investors redeem as they would with a fund? If the underlying asset is fraudulent, do investors have channels for protection? Until these issues are resolved, RWA will always be just 'castles in the air'.
Ironically, many RWA projects are currently playing tricks to evade regulation: for example, placing the issuing entity in the Cayman Islands and using the guise of 'decentralized autonomous organizations (DAO)' to evade legal responsibilities, claiming 'not subject to the regulation of any country'. But the reality is, as long as you target investors from a specific country, you must comply with local laws—DAOs are not lawless places, and Tokens are not 'get-out-of-jail-free cards'.
The future of RWA: tearing off the 'myth' label and returning to its 'tool' essence.
Saying all this 'cold water' isn't to deny the value of RWA. On the contrary, RWA does have enormous potential: it can improve asset circulation efficiency, lower financing costs, and provide liquidity for niche assets such as shares in artworks, real estate investment trusts (REITs), and corporate receivables. But the prerequisite is to remove the filter of 'blockchain is omnipotent' and honestly solve the core issues of law, regulation, and compliance.
Future RWAs should look like this:
Compliance First: Issue under specific legal frameworks, such as the US Reg D private placement exemption, or China's asset securitization pilot, first become a 'legal financial instrument', then discuss 'on-chain innovation'.
Technical Assistance: Blockchain is used to improve the efficiency of certificate circulation and enhance transparency, not to subvert the legal system. For instance, using smart contracts to automatically execute dividends and using on-chain data for real-time regulatory compliance checks.
Focus on vertical scenarios: Start with standardized assets like funds, bonds, commercial paper, and REITs, which have clear legal relationships and mature regulatory frameworks, making them easier to implement. Instead of jumping straight into high complexity, high regulatory risk areas like 'property fragmentation' or 'artwork splitting'.
Most importantly, investors need to be clear-headed: RWA is not a 'lying down and earning' magic tool, but a more efficient financial instrument that still requires risk assessment, legal review, and compliant investment. Projects packaged as 'assets on-chain, global circulation' are either naive novices who don't understand the field or scammers looking to exploit them—true RWA players are quietly dealing with regulatory authorities in various countries, not shouting slogans on social media.
Conclusion: Don't be misled by 'on-chain'; see through the essence of RWA.
Returning to the initial question: What exactly are we talking about when we discuss RWA asset on-chain? It’s not a technical gimmick of data on-chain, nor is it a utopia of global asset circulation, but a compliance revolution of 'reconstructing the rights certificate system using blockchain technology'. The core of this revolution is not technology, but law; not decentralization, but regulatory compatibility; not creating new assets, but making old assets circulate more efficiently.
Those who discuss RWA without considering the law are like building high rises on the beach; those who ignore regulation while talking about global circulation are like walking through a powder keg with a torch. The true value of RWA lies in the compliance documents of each jurisdiction, in the rights mapping between assets and Tokens, and in the specific terms of investor protection—not in the beautiful words like 'disruption', 'reconstruction', or 'trillion-dollar market' found in white papers.
Next time someone tells you that 'RWA asset on-chain will change the world', you might as well ask them three questions:
1. In which country's legal system is your Token recognized as a legitimate rights certificate?
2. How do you prove that the on-chain Token truly corresponds to a real asset, and not just air?
3. If the asset defaults, what legal channels can you, as an investor, use to protect your rights?
The answers lie in these three questions. The story of RWA has just begun, but only by tearing off the 'myth' packaging can we see the true value—or the bubble.
