RWA (Real-World Assets) refers to the process of converting physical or traditional financial assets in the real world—like stocks, real estate, bonds, commodities, currencies, or even machinery—into digital tokens through blockchain technology. These tokenized assets are brought into the decentralized finance (DeFi) ecosystem, enhancing the liquidity, transparency, and accessibility of the assets while unlocking new areas that traditional finance finds difficult to reach. The rise of RWA is reshaping the global investment landscape, injecting new vitality into innovation and wealth growth.
In recent years, the RWA tokenization market has rapidly emerged. Industry forecasts suggest that by the end of 2025, its global market size is expected to exceed $50 billion, with long-term potential reaching as high as $18.9 trillion. As a pioneer in the RWA field, the U.S. attracts a large number of institutions and investors due to its mature financial market and clear regulatory framework, becoming a bellwether for this trend. However, behind the opportunities, compliance remains a core challenge that cannot be overlooked.
For mainland Chinese investors, participating in RWA investments is both attractive and requires caution. As the regulatory environment for the Web3 industry varies by country, investors must comply with both domestic and international laws and regulations. This includes, but is not limited to, anti-money laundering (AML) and know your customer (KYC) requirements, strict capital control policies, and tax declarations and regulatory provisions related to digital assets.
This article will focus on RWA asset investments, deeply analyzing the compliance points for mainland investors involved to help readers embrace opportunities while avoiding potential risks.
Global trends in RWA
According to data from Security Token Market, by the end of 2024, over $50 billion worth of assets had been tokenized globally, with real estate accounting for $30 billion. As more institutions adopt blockchain technology, these figures are expected to soar significantly in 2025. In the long term, the RWA market is projected to reach $18.9 trillion by 2033, indicating tremendous development potential.
2025 is seen as a critical turning point for the development of RWA, as the market shifts from an experimental phase to practical applications, with institutional participation and the maturation of regulatory frameworks becoming the main driving forces.
1. United States
In the U.S., the RWA (Real-World Assets) tokenization market is thriving, with the market size expected to reach $50 billion by the end of 2025, driven primarily by U.S. Treasury bonds. The U.S. market benefits from a stable regulatory environment and institutional participation. The SEC has issued guidance on the registration of tokenized securities, for example, in a speech on May 8, 2025, the SEC considered potential exemptions allowing the use of Distributed Ledger Technology (DLT) to issue, trade, and settle securities.
Large financial institutions like BlackRock and JPMorgan are also actively positioning themselves; BlackRock's BUIDL fund launched in March 2024, attracting over $460 million in funds. Robinhood submitted a 42-page proposal in April 2025, calling for the establishment of a federal regulatory framework, marking a key step in the integration of traditional finance and blockchain.
2. European Union
The EU's (Regulation on Crypto-Assets) (MiCA) will be fully effective on December 30, 2024, providing a comprehensive regulatory framework for crypto-assets, including RWA. MiCA covers the issuance of Asset-Referenced Tokens (ARTs) and Electronic Money Tokens (EMTs), aiming to balance transparency, security, and innovation, promoting the widespread application of RWA in Europe. In 2025, the EU will continue to refine Level 2 and Level 3 measures to ensure the implementation of the regulatory framework.
3. Singapore
Singapore, as a global center for blockchain and fintech, is showing strong momentum in the RWA tokenization field. MAS has issued guidelines for the issuance and custody of digital payment tokens (including RWA); for instance, the final response released in November 2023 detailed business conduct and consumer protection measures.
Companies like Emurgo, Helix, and D3 Labs are thriving in this space, with InvestaX obtaining MAS licensing as a leading tokenization SaaS platform, further promoting the construction of the RWA ecosystem.
4. Hong Kong
Hong Kong, with its status as an Asian financial hub, shows significant potential in the RWA tokenization field. The SFC and HKMA actively promote the development of digital assets and RWA tokenization through forward-looking policies.
During the 2025 Web3 Festival, RWA tokenization became a focal point of discussion, with an expected increase in projects in real estate and financial securities. OKG Research predicts that tokenized assets in Hong Kong, excluding stablecoins, will exceed $30 billion by 2025.
5. Other Asian countries
Thailand:Bangkok will host the ONCHAIN 2025 conference on April 25, 2025, which is the first conference in Asia focused on RWA, attracting over 200 leaders from traditional finance, FinTech, and Web3 to discuss trends, regulations, and innovations in RWA, such as D3 Labs' Seaseed cross-border financial solutions and Helix's RWA DeFi protocol.
Japan: Saison Capital (a venture capital fund backed by the Tokyo-listed financial services giant Credit Saison) participated in ONCHAIN 2025, indicating Japan is also actively exploring the potential of RWA.
Current status of RWA development in mainland China
In mainland China, the tokenization of physical assets (RWA) is currently in a regulatory 'gray area', lacking a clear legal and policy framework. The implementation of RWA in China faces obstacles mainly in the areas of homogeneous token issuance and circulation.
According to the announcement jointly issued by seven departments including the People's Bank of China and the Central Cyberspace Affairs Commission (referred to as the '9.4 Announcement') states: The financing entity conducts illegal sales and circulation of tokens to raise funds from investors (including 'virtual currencies' like Bitcoin and Ethereum tokens) through token issuance financing behavior (ICO), which is essentially an 'unauthorized illegal public financing activity.' RWA projects may be viewed as securities or financial products and must comply with strict issuance and trading requirements; if publicly issued without approval, they may be deemed illegal fundraising.
RWA assets within mainland China often adopt strategies such as overseas issuance, using non-cryptocurrency digital assets, or focusing on specific areas (like supply chain finance) to evade compliance risks. However, the protective effect of these countermeasures is limited. Regulatory authorities may 'look through the form to the substance,' classifying related activities as financial behaviors, and overseas issuance cannot completely evade the regulatory reach of mainland China. Cross-border issuance must meet both mainland and overseas legal requirements, increasing compliance complexity.
Regulatory uncertainty leads project parties and investors to face multiple compliance risks. Investors need to cautiously assess the risks of participating in RWA projects to avoid losses due to policy changes or legal liabilities.
Advantages of asset tokenization
Asset tokenization not only provides a decentralized and trust-minimized alternative to replace real-world products, investment tools, or services but also brings many significant advantages. By leveraging blockchain technology for the tokenization of real-world assets, the value, accessibility, and utility of the assets can be enhanced, while also creating conditions for the broader application of off-chain data in the decentralized finance (DeFi) ecosystem. Here are the core advantages of asset tokenization:
1. Increasing liquidity
In traditional markets, financial events are usually recorded in their respective independent ledgers, leading to inefficiencies, such as increased transaction costs and extended settlement times. The lack of interoperability between different systems further exacerbates liquidity fragmentation. Asset tokenization effectively addresses this issue by creating interoperable tokenized assets.
In addition, tokenization can convert traditionally illiquid assets (such as real estate or artwork) into millions or even billions of tokens to achieve fractional ownership. These tokens can be listed for trading on widely circulating exchanges, eliminating the need for high-cost trading intermediaries, significantly expanding the potential buyer base and thereby increasing asset liquidity and market efficiency.
2. Enhanced accessibility
Many high-yield assets are often out of reach for ordinary investors due to financial or regulatory thresholds. For instance, film financing typically involves high upfront costs and budget overruns, allowing only the wealthiest investors to participate. However, a successful film could yield multiple returns in a short time. Similar investment opportunities also include the purchase and rental of collectible supercars, distressed overseas assets, or multi-family properties.
Tokenization breaks these barriers through a crowdfunding-like model. Investors can purchase tokens linked to assets, thus participating in asset classes that were previously difficult to access with lower capital. This approach not only lowers investment thresholds but also provides a broader group of investors with opportunities to share in economic returns.
3. Enhancing transparency
High-value assets often lack reliable and easily accessible information, such as yield records, ownership history, or sales data. This opacity is particularly pronounced when assessing foreign assets or when buyers cannot inspect the assets in person. Tokenization utilizes the transparency and immutability of blockchain to provide a solution.
Through tokenization, ownership records, interest or dividend returns can be publicly tracked and audited, depending on the logic of the smart contracts binding the assets. This traceability feature minimizes the risks of forgery and fraud, particularly applicable to high-priced luxury goods such as wine, caviar, and fields like fashion and art, thereby enhancing the security and credibility of investments.
4. Unleashing composability
One of the most promising advantages of asset tokenization is its composability with the DeFi ecosystem. By bringing the value of real-world assets into decentralized finance, users can benefit from interest generated from off-chain collateral. For example, decentralized money markets built around tokenized assets not only enhance liquidity in the DeFi space but also provide retail investors with new avenues to access high-end investment categories.
In the future, tokenization will bring more innovative opportunities for smart contract developers. By combining tokens linked to different assets, entirely new synthetic assets, indices, or token baskets can be created. The ability to convert real-world income flows into collateral will further drive the rapid development of the DeFi ecosystem, unleashing unprecedented potential.
Nature of RWA assets
RWA tokenization (tokenization) digitizes tangible or intangible assets (like stocks, bonds, real estate, etc.) in the real world and records them on the blockchain, allowing trading through blockchain or exchanges. This process provides liquidity, transparency, and accessibility for RWA assets but also brings legal and regulatory complexities.
1. Classification of RWA asset properties
The classification of RWA asset attributes is primarily based on the type of underlying assets and the legal structure of tokenization. Generally, the underlying assets of RWA can be divided into the following categories:
Securities: Including stocks, bonds, ABS, and other financial instruments that typically represent ownership or debt relationships.
Real Assets: Including tangible assets like real estate and commodities, emphasizing their physical existence and utility.
Intangible Assets: Such as intellectual property and copyrights, which reflect economic value rather than physical form.
After tokenization, the legal classification of assets may change, especially regarding whether they are regulated as securities.
If the tokenized asset is designed as a tradable investment tool (such as being split into small shares), similar to REITs or ABS, it may be classified as securities by regulators (such as the U.S. SEC) and must comply with relevant securities laws. Therefore, tokenized RWA assets in the U.S. market must adapt to existing securities laws and face regulatory challenges.
2. Specific asset analysis
Due to the differing laws and policies regarding RWA in various countries, the most representative U.S. regulations will be used as the analytical focus.
Tokenized U.S. Stocks
In the U.S., tokenized U.S. stocks are typically viewed as securities since they represent investments in company ownership, sharing the same nature as traditional stocks. As asset tokenization usually involves converting ownership or rights into tradable on-chain tokens, stocks, as a typical representation of financial assets, are still regarded as securities after tokenization.
Tokenized U.S. Bonds
Tokenized U.S. Treasury bonds are typically viewed as debt securities because bonds themselves are a type of debt instrument, retaining their debt nature after tokenization. The classification of tokenized assets closely relates to the underlying assets; U.S. Treasury bonds, representing government or corporate debt, are still regarded as securities after tokenization, but specifically as bonds.
Tokenized Real Estate
Tokenized real estate projects are usually viewed as real estate, but their classification is controversial. If the tokenization structure allows real estate to be divided into small shares and traded freely, it may be regarded as securities. Moreover, tokenized real estate might involve compliance issues under securities law, especially under the definition of investment contracts.
On the other hand, if tokenization merely represents direct ownership and does not involve the distribution of investment returns, it may be regarded as a physical asset. Regulatory frameworks in different jurisdictions may lead to classification differences; for instance, the U.S. might classify it as securities, while some European countries may prefer a physical asset classification.
3. Asset attributes after tokenization
After tokenization, RWAs are typically viewed as financial assets because they can be traded and managed through digital platforms, exhibiting characteristics of financial instruments. The increase in liquidity due to asset tokenization allows more people to participate in high-value asset investments, making them resemble financial assets more closely.
However, tokenization does not alter the essence of the underlying assets. For example:
Tokenized stocks are still stocks (securities) that represent ownership in a company.
Tokenized bonds are still bonds (debt instruments) that represent creditor relationships.
Tokenized real estate is still real estate (physical assets), but it may be structured as tradable financial instruments.
In the U.S., the SEC may use the Howey Test to determine whether tokenized assets constitute investment contracts and thus classify them as securities. This test is significant in finance and the cryptocurrency sphere, especially in determining whether new types of tokenized assets are subject to securities regulation.
The four elements of the test are as follows:
Investment of money:Investors must invest with money, physical assets, services, or other forms of value.
Common enterprise: Investors' funds are pooled together with others in a business or project, typically involving a pool of funds or shared interests.
Expectation of profits: Investors reasonably expect to earn financial returns from their investments, such as capital appreciation or dividends.
Profits derived from the efforts of others: Investors' profits primarily rely on the management, operation, or efforts of the issuer or third parties rather than their own efforts.
If the above four elements are met, the asset is categorized as a security. Generally, tokenized RWA assets meet points 1, 2, and 4.
If the issuing asset of RWA commits to dividends, or if the investor aims to obtain returns from asset investments, then it meets the third expectation of profits, and the RWA asset should be classified as a security. If the token holders of the issuing RWA asset merely serve as a tool for proof of asset ownership, such as to prove property ownership, and do not enjoy the right to profit returns, then it does not meet the third point and should be classified as a physical asset.
Therefore, for most RWA assets that yield profit returns, they are inclined to be viewed as securities in the U.S., while retaining the attributes of underlying assets as digital tools.
4. Complexity of regulatory and legal environments
The classification of tokenized RWA is significantly influenced by the regulatory framework.
For example, in the U.S., the SEC has strict requirements for the classification of tokenized assets as securities, which may require registration or finding exemption pathways, needing to balance compliance, safety, and robustness. In Europe, data privacy laws like GDPR may also impact the processing of investor data during the tokenization process, increasing compliance costs. Regulatory differences across jurisdictions may lead to the same asset being classified differently in different regions, posing challenges for global investors and issuers.
The classification of RWA asset properties depends on the type of underlying assets and the legal structure of tokenization. Tokenized U.S. stocks and bonds are usually regarded as securities, while real estate projects are classified as either securities or physical assets depending on whether they yield returns, with specific classification requiring consideration of the regulatory environment.
Participation restrictions for RWA compliance
Due to varying regulatory intensity and compliance in the Web3 industry across different countries, if mainland investors participate, they need to follow both domestic and international laws and regulations related to funds and taxation.
So, what are the key points for mainland Chinese investors to consider when participating in overseas RWA asset investments?
1. Foreign exchange controls
RWA, as an asset that tokenizes physical or traditional financial assets in the real world through blockchain technology, can be purchased directly on the blockchain where the asset is issued or through blockchain exchanges and securities exchanges that support RWA asset trading.
To purchase overseas RWA assets, one first needs foreign currency (such as USD, HKD, etc.) or stablecoins (USDT, USDC, etc.) for the purchase. If one currently holds RMB assets, they need to exchange currency and purchase stablecoins, which may require attention to compliance with related laws and regulations (like foreign exchange management regulations).
Personal foreign exchange management restrictions
According to the (Measures for the Administration of Personal Foreign Exchange) (Order [2007] No. 3 of the State Administration of Foreign Exchange) and its implementation rules, domestic individuals are entitled to a facilitation purchase quota of equivalent $50,000 per year for tourism, study abroad, and other current account expenditures, but this cannot be used for overseas securities investments (like U.S. stocks, RWA, etc.). Furthermore, domestic individuals are prohibited from using their own foreign exchange or purchasing foreign exchange for overseas securities investments without approval, unless through compliant channels like QDII (Qualified Domestic Institutional Investor).
Regulations on foreign exchange management for overseas direct investment (ODI)
According to the (Regulations on Foreign Exchange Management for Overseas Direct Investment) (Hui Fa [2009] No. 30) and the (Foreign Exchange Management Regulations): Domestic companies engaging in overseas securities investments must first register for overseas direct investment (ODI) with the foreign exchange administration and submit proof of funding sources, investment plans, and other materials. Unregistered unauthorized outflows of funds may constitute illegal currency evasion or cross-border capital flow. ODI typically applies to physical investments (like setting up overseas enterprises or mergers and acquisitions); if directly used for securities investment, it must comply with QDII or cross-border securities investment pilot policies, or it may be deemed illegal.
Cross-border broker-dealer and exchange business risks
According to the (Measures for the Administration of Securities Brokerage Business) issued by the China Securities Regulatory Commission in 2023: Unlicensed business activities are prohibited: Foreign brokers must not directly solicit business or provide trading services to domestic investors without a license in China. While existing investors may continue to trade, new funds being sent overseas must comply with foreign exchange management regulations; otherwise, they may be deemed as illegal outflow of funds.
Domestic investors trading through blockchain exchanges or securities exchanges may be regarded as participating in illegal cross-border securities activities.
Virtual currency trading is not protected.
According to the notice (on further preventing and dealing with risks of virtual currency trading speculation), purchasing digital currencies is considered a high-risk behavior as it is classified as non-legal tender and not protected by law. Current regulatory policies explicitly prohibit financial institutions from participating in stablecoin-related businesses and have cleared domestic trading platforms, allowing individuals to only engage in over-the-counter transactions through foreign channels, but they may face risks such as invalid contracts, fund safety, anti-money laundering monitoring, and policy tightening. Unlike regions like Hong Kong that allow compliant stablecoin trading, mainland China strictly restricts such transactions, and investors must bear potential losses and closely monitor regulatory dynamics to avoid legal red lines.
Compliant offshore funds
However, domestic investors who have legitimate funds abroad, such as personal income from abroad (like salary, savings, or investment income), or funds from foreign companies and other entities, can use these funds to purchase RWA asset tokens without being subject to domestic foreign exchange controls and investment restrictions.
2. Tax policies
How should mainland Chinese residents pay taxes according to the tax policies of different countries after purchasing, holding, and selling overseas RWA assets?
This article takes purchasing U.S. RWA assets as an example. However, due to the development of regulations and tax burdens on tokenized assets in the U.S., the SEC has recently discussed the regulatory pathways for RWA tokenization but has not clarified tax burden details, only discussing within the existing regulatory framework.
Analysis of tax burden in the U.S.
According to the U.S.-China tax treaty, the tax burden on non-resident investors in the U.S. for RWA assets invested from China is primarily withholding tax, including:
If it is tokenized real estate (like real estate): According to Articles 6 and 12 of the treaty, its returns need to be taxed in the U.S. Also, according to FIRPTA (Foreign Investment in Real Property Tax Act), a tax rate of 20% or lower may apply.
If it is tokenized stocks or bonds: Dividends are subject to a cap of 10% withholding tax according to Article 9; interest is subject to a cap of 10% withholding tax according to Article 10; capital gains are generally exempt from tax for non-residents unless involving U.S. real estate.
Analysis of tax burden in China
Although the classification of RWA assets in China is still unclear, their returns can refer to potentially applicable investment income. According to current tax laws, a 20% capital gains tax is levied on overseas investment income, with particularly strict tax audits for high-net-worth individuals.
If RWA is treated as a digital asset or referenced to other traditional assets, the sale proceeds may be subject to a 20% capital gains tax, and foreign taxes already paid can be declared for exemptions.
If the dividend income from RWA assets is considered separate income, individual income tax should be paid according to dividend tax; if 10% withholding tax has been paid in the U.S., it can be claimed for credit; if the dividend income from RWA assets is included in the price of the RWA assets, it should be included in investment income and subject to capital gains tax.
According to the CRS (Common Reporting Standard) international tax information automatic exchange standard, personal income information across multiple countries may be exchanged through CRS, aiming to combat tax evasion and avoidance through international cooperation. According to Chinese law, investors are obligated to actively declare and pay taxes legally and compliantly.
Future Trends
The future trend of RWA tokenization is an important topic in the current fintech field, especially for mainland Chinese investors, where trend analysis is particularly critical in conjunction with global dynamics and local regulatory environments.
According to recent research, the RWA tokenization market is expected to exceed $50 billion by 2025, a 67% increase from 2024, with real estate and bonds being the main drivers. By 2030, the RWA tokenization market could reach $30 trillion, with data from 2025 indicating that this goal is accelerating towards realization. The main drivers of growth include blockchain adoption by traditional financial institutions and the gradual clarification of the regulatory environment.
The global regulatory framework is gradually improving, with specific regulations introduced in the UAE, Europe, and Asia to provide legal support for RWA tokenization. For example, regulatory coordination is seen as a key factor in promoting market growth. Particularly in the U.S., institutional participation is another significant driving force for the development of RWA tokenization. For instance, in 2025, BlackRock seeks regulatory approval for tokenized bonds and stocks, and JPMorgan has launched an internal tokenization platform, demonstrating institutional confidence in RWA.
However, the regulatory environment in mainland China remains in a 'gray area,' lacking specific policies for RWA. According to analysis by PANews, mainland projects often adopt private or consortium chains, and trading platforms are often limited to cultural or digital exchanges.
Summary
For mainland Chinese investors, RWA tokenization is both attractive and accompanied by unique challenges. Due to the domestic regulatory environment for the Web3 industry being in a 'gray area' and lacking a clear legal and policy framework, investors must carefully evaluate compliance risks when participating in domestic RWA projects to avoid losses from policy changes or legal liabilities. Simultaneously, when participating in overseas RWA investments, investors must strictly adhere to domestic and international laws and regulations, including foreign exchange controls, tax compliance, and anti-money laundering and KYC requirements.
Despite compliance challenges, the advantages of RWA tokenization cannot be overlooked. It opens up new possibilities for investors and developers by enhancing liquidity, increasing accessibility, improving transparency, and unleashing the composability of the DeFi ecosystem. In the future, as the global regulatory framework gradually improves and technological innovations continue to advance, investors in mainland China can participate in this fintech revolution through compliant channels.
While chasing returns, investors must remain highly cautious, fully understand and comply with relevant domestic and international laws and regulations to ensure the safety and compliance of funds. Only under the dual guarantee of technological innovation and compliance optimization can mainland investors achieve wealth growth in the wave of RWA tokenization while effectively avoiding potential legal and financial risks.
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Author: Crypto Miao