Written by: Shao Jiadian, Liu Honglin; Mankun
In the Web3 world of 2025, what’s most abundant are 'windfalls'. Following DeFi, NFTs, the metaverse, and memes, RWA suddenly became a top trend—everywhere you see slogans like 'assets on-chain reconstructing the financial system' and 'trillion-dollar market new blue ocean', with various RWA industry associations, summits, alliances, and forums proliferating like cancer cells, outnumbering actual operational RWA projects by dozens of times. Even the grandpa selling pancakes at the village entrance has heard that 'putting houses on-chain can sell globally', but sorry, today I must pour a bucket of cold water: when you shout 'RWA assets on-chain', you might not even understand what you're talking about.
First, break the first myth: RWA is not a 'new species', but '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 trading software, and the bonds in bank apps are essentially all 'real asset tokenization'—stocks are digital certificates of equity, funds are share certificates of asset portfolios, and bonds are electronic records of debt. The difference lies merely in that traditional financial tokens exist in centralized databases of banks and brokers, while RWA tokens exist in the decentralized ledger of blockchain. It's like switching the ledger from Excel to Google Docs; the core is still bookkeeping, just that the method of bookkeeping has changed.
But now many people talk about it as if 'humanity has discovered fire for the first time': 'Wow! Blockchain has put assets on-chain!' Please, stocks have achieved 'asset tokenization' as early as the 17th century, only then it was done with paper certificates and later turned into electronic data. RWA is essentially 'tokenization 2.0', moving certificates from centralized databases to the chain, adding features like immutability and decentralized verification, yet the underlying logic remains 'using digital certificates to represent rights.'
To give a straightforward example: you bought Tencent's stocks, and the brokerage app shows you hold 100 shares. These 100 shares are the tokens of Tencent's equity, existing in the broker's database. If Tencent issues RWA equity, you will receive 100 tokens on the blockchain, which essentially still represent these 100 shares of equity. The difference is that these tokens can circulate on-chain, while traditional stocks can only be transferred on an exchange. So, don’t mythologize RWA; it’s not about 'creating new assets' but rather 'exchanging old assets for a cooler ledger.'
90% of people are missing the point: the essence of RWA is not 'data on-chain', even less 'assets on-chain', but 'rights certificates on-chain'.
Now, there are all sorts of nonsense on the streets claiming 'data on-chain = assets on-chain'. Some people say, 'I scanned the property certificate into a PDF and put it on-chain, so this house has become RWA!' Wake up, you can upload 100 photos of the property certificate to the blockchain, but the house is still registered in the housing authority's system, which has nothing to do with on-chain data. Data is merely information, while 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 authority's registry; this is the right granted by the law.
Some people still boast: 'Our token maps 1:1 to real assets; holding the token equals owning the asset!' What’s the difference from children playing house? You draw a 'one million tokens' saying it represents the convenience store downstairs; does that mean the store belongs to you? Without legal backing, such 'mapping' is just castles in the air. The core of RWA is not to move assets themselves onto the chain (houses cannot be moved, equity cannot be moved), but to tokenize the 'rights certificates proving you own the assets'—for example, converting legally recognized rights certificates like stocks, bonds, and property certificates into on-chain tokens.
Key point: the essence of assets is 'rights', and the carrier of rights is 'legally recognized certificates'. Movable property relies on contracts and invoices, immovable property relies on property certificates, equity relies on the shareholder register, and debt relies on debt contracts. What RWA aims to do is to repackage these 'legally protected certificates' using blockchain technology to make the transfer of certificates more efficient and transparent, but the premise is: first, there must be legally framed rights, and then on-chain tokens. If you jump over the law and talk about 'assets on-chain', that's simply playing rogue.
Don’t treat 'going on-chain' as a holy grail: without legal backing, RWA is just 'the emperor’s new clothes'.
The blockchain community loves to say 'code is law', but in the RWA field, law is the parent of code. You hold a Bitcoin private key and you own Bitcoin 100% because the 'rights' of Bitcoin are entirely defined by blockchain code; however, RWA tokens represent real assets, and the rights to real assets are dictated by the laws of various countries. For example, if you buy a token representing a U.S. property, and the developer runs away, you cannot just take your private key to sue in a U.S. court—first, the court needs to see: is this token recognized as a legitimate rights certificate under local law? Do you meet the criteria for a 'qualified investor' as defined by the U.S.? Did your purchase process comply with U.S. securities regulations?
To give a more heart-wrenching example: someone in the country put a house in Beijing 'on-chain' and issued 1,000 tokens, with each token representing 0.1% ownership.
But according to Chinese law, changes in property ownership must be registered at the real estate registration center; the circulation of tokens on the chain is simply not valid. 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 and won’t consider the records on the blockchain—because the law does not recognize the legality of such 'on-chain rights certificates'.
Therefore, the core of RWA is not a technical issue, but a legal construction issue: how to make on-chain tokens recognized as legitimate rights certificates within the real legal system? This needs to solve three key questions:
1. Rights anchoring: Tokens must correspond to rights that are protected by law in reality (such as equity, debt, property rights), and not just air.
2. Compliance framework: the issuance process must comply with the regulatory requirements of the target market (for example, SEC regulations in the U.S., financial regulation in Hong Kong, China), otherwise, it constitutes illegal issuance of securities.
3. Dispute resolution: when disputes arise regarding the rights represented by the token, can the legal system recognize on-chain records as evidence and protect the rights of holders?
Those who talk about RWA without considering the law are either clueless amateurs or pretenders who know better—after all, 'decentralization and global circulation' sounds much better than 'first sorting out regulations in various countries'.
RWA is essentially a financial product; do not be blinded by 'decentralization'.
Many people blow RWA up as a 'disruptive financial artifact', saying it allows ordinary people to invest in overseas properties, top private equity, and artworks. But the truth is: RWA is simply the tokenization of financial tools, and finance inherently carries regional and regulatory shackles.
First of all, all RWA are 'financial products'. Whether it’s property mortgage bonds, corporate receivables, or fund shares, they are essentially tools for 'making money work for you', and must conform to the core logic of financial regulation: protecting investors, preventing risks, and maintaining market stability. For instance, in the U.S., investors purchasing RWA-type securities must be 'qualified investors', while in China, financial products must be approved and cannot illegally raise funds from the public. Those claiming 'anyone can buy RWA' are either engaged in illegal fundraising or playing a dangerous game of 'regulatory arbitrage'.
Secondly, the regionality of finance makes it difficult for RWA to achieve 'global circulation'. An RWA token issued in the U.S. may be viewed as 'overseas securities' in China and cannot be sold to Chinese investors without approval; similarly, a corporate debt RWA from China may not be purchasable by U.S. investors due to regulatory restrictions. Even if global circulation is technically achieved, legal recognition remains a significant obstacle—can you imagine a Chinese investor holding a token going to a U.S. court to sue a defaulting American company? Not to mention the cost of cross-border litigation, just the question of 'whether the U.S. court recognizes the legality of your token holding' is a huge issue.
More realistically, financial risks do not disappear just because of 'going on-chain'. Credit risk, market risk, and liquidity risk from traditional finance still exist in RWA, and may even become more concealed due to 'decentralization'. For instance, an RWA project uses fake assets as collateral to issue tokens—the immutable nature of the blockchain could make the scam harder to expose—after all, the data is real, but the assets are fake.
Beware of the 'RWA bubble': 99% of the discussion is just hot air, and the real difficulty lies in the 'last mile'.
The current RWA circle is very much like the ICO craze of 2017: all sorts of white papers are flying around, the number of intermediaries exceeds that of operational cases, and industry associations outnumber project parties. But very few can actually present compliant and operational RWA cases. Why? Because the implementation of RWA has to cross three 'ghost gates':
First barrier: legal compliance.
This is the toughest barrier. Taking the U.S. as an example, the SEC views most RWAs as 'securities', which must comply with (securities law), complete registration or obtain exemption; otherwise, it’s illegal. This means project parties need to hire top legal teams, spend millions of dollars to get the legal documents sorted, and pass scrutiny from regulatory agencies. 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.
Second barrier: asset penetration.
To gain investors' trust, RWA must solve the 'asset authenticity' issue. For example, in a real estate RWA, does the on-chain token truly correspond to a real property? Is the ownership clear? Is there any mortgage? This requires professional asset assessment, due diligence, and legal verification, rather than relying on the 'smart contracts execute automatically' from the white paper. Many projects claim 'on-chain equals confirmation of ownership', but in reality, property ownership confirmation requires a lot of effort, and blockchain merely records the result, not replacing offline legal processes.
Third barrier: investor protection.
Traditional finance has a mature investor protection mechanism, such as regulation by the securities commission, bank custodianship, and risk warnings. But what about RWA? In a decentralized structure, who supervises the project parties? Who guarantees the investors' right to information and redemption? If token prices plummet, can investors redeem like they do with funds? If there’s fraud at the asset level, do investors have channels to protect their rights? Until these questions are resolved, RWA will forever be a 'castle in the air'.
Ironically, many RWA projects are playing tricks to evade regulation: for example, placing the issuing entity in the Cayman Islands, using the name 'Decentralized Autonomous Organization (DAO)' to evade legal responsibilities, claiming 'not subject to any country's regulation'. But the reality is, as long as you target specific country investors, you must comply with local laws—DAO is not a lawless land, and tokens are not a 'get out of jail free card'.
The future of RWA: tearing off the 'myth' label and returning to the essence of 'tools'.
Saying all these 'cold water' words is not to deny the value of RWA. On the contrary, RWA indeed has tremendous potential: it can improve asset circulation efficiency, reduce financing costs, and provide liquidity for niche assets such as shares of artwork, real estate investment trusts (REITs), corporate receivables, etc. But the prerequisite is: remove the 'blockchain is almighty' filter and honestly address the core issues of law, regulation, and compliance.
The future of RWA should look like this:
Compliance first: issue within specific legal frameworks, such as the U.S. Reg D private placement exemption or China’s asset securitization pilot, first become 'legitimate financial instruments' before discussing 'on-chain innovation'.
Technical assistance: using blockchain to enhance the efficiency of certificate circulation and increase transparency, rather than overthrowing the legal system. For example, using smart contracts for automatic dividend execution and using on-chain data for real-time regulatory compliance checks.
Focus on vertical scenarios: starting with standardized assets such as funds, bonds, commercial papers, REITs, where the legal relationships are clear, and the regulatory framework is mature, making it easier to land. Instead of immediately tackling high complexity and high regulatory risk areas like 'property fragmentation' and 'artwork splitting'.
Most importantly, investors need to be clear-headed: RWA is not a 'get-rich-quick' tool, but a more efficient financial instrument that still requires risk assessment, legal review, and compliant investment. Projects packaged as 'assets on-chain, globally circulating' are either clueless amateurs or con artists looking to fleece others—true RWA players are quietly working with regulatory agencies in various countries, not shouting slogans on social media.
Conclusion: Don’t be misled by 'going on-chain'; see the essence of RWA.
Returning to the initial question: when we talk about RWA assets on-chain, what are we really talking about? It’s not the technical gimmick of data on-chain, nor the 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 skyscrapers on the beach; those who ignore regulation while discussing global circulation are like carrying torches through a gunpowder warehouse. The true value of RWA lies in the compliance documents of each jurisdiction, in the mapping of rights between assets and tokens, and in the specific terms for investor protection—not in the pretty words like 'disruption', 'reconstruction', and 'trillion-dollar market' found in white papers.
Next time someone tells you 'RWA assets 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 assets in reality, and not just air?
3. If the asset defaults, what legal channels do you have as an investor 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 real value—or the bubble.