Driving factors of RWA:
What factors are driving the rapid influx of users into the RWA sector? What factors are driving institutions to have such high expectations for the RWA sector, with a market value expected to exceed $16 trillion in the next five years?
Liquidity demand: Traditional assets (such as real estate and infrastructure) are difficult to circulate efficiently due to high thresholds and low liquidity. RWA attracts global small and medium-sized investors by tokenizing and splitting ownership.
Policy support: The Hong Kong Monetary Authority's 'sandbox mechanism' and the SEC's compliance exploration of tokenized securities provide a regulatory testing ground for RWA.
Technological maturity: The integration of AI, IoT, and blockchain enhances the transparency and credibility of asset data on-chain, such as Ant Chain's 'asset chain + transaction chain' architecture.
Core advantages of RWA:
Improved financing efficiency: Traditional ABS requires 6-12 months, while RWA financing cycles can be shortened to 8 weeks (e.g., the Langxin charging pile project).
Cost reduction: Automated management of smart contracts reduces intermediary fees, with the financing cost of a certain new energy company dropping from 15% to 8%.
Enhanced liquidity: Tokenized assets support 24-hour global trading, such as the RealT platform allowing investments in U.S. property rights for as low as $50.
RWA financing model five: RWA issuance process.
One, Asset selection: Focus on regulatory-friendly and highly certain assets.
In theory, RWA can cover physical and intangible assets, such as stocks, bonds, real estate, cash, artworks, precious metals, accounts receivable, intellectual property, consumer points, carbon emission quotas, etc. However, under the current regulatory environment and technological maturity limitations, mainstream RWA assets are concentrated in the following categories:
The Hong Kong Monetary Authority's regulatory sandbox currently focuses on four directions: fixed income and investment funds, green and sustainable finance, trade and supply chain financing, and liquidity management. As experiments deepen, the asset categories of RWA are expected to expand.
Two, Issuance entities: Led by compliant financial institutions, gradually expanding to small and medium-sized enterprises.
Currently, issuers are mostly publicly listed companies, due to reasons including:
First: High credit and transparency.
Second: Strong asset data standardization capability.
Third: The ability to bear pilot risks.
However, this deviates from the original intention of inclusive financing for RWA. In the future, RWA issuance schemes should explore broader groups such as small and medium-sized enterprises and green industries.
Three, Transaction structure arrangement: A composite process of cross-border compliance and multi-role collaboration.
This process has the following characteristics:
Cross-border nature: Need to coordinate regulatory approvals between mainland and Hong Kong, synchronized cross-border capital flow and compliance;
Multi-role collaboration: Involvement of asset parties, technology parties, regulators, and investors requires efficient collaboration;
Deep integration of law and technology: Smart contracts, data permissions, and security compliance must be precisely embedded in transaction processes;
High transparency and auditability: Ensuring clear investor rights and complete regulatory traces through on-chain records.
✅ It is recommended to design standardized operating procedure templates and compliance checklists to improve the efficiency and consistency of RWA issuance.
Four, blockchain platform and technology selection: Alliance chain + cross-chain bridge architecture is gradually becoming mainstream.
Asset chain (alliance chain): Standardization and trustworthiness of on-chain data aimed at asset parties, operators, and risk control parties;
Transaction chain (alliance chain): Aimed at investment institutions and regulatory parties, providing transparent transaction and regulatory interfaces;
Trusted cross-chain bridge: Connecting two chains to achieve data flow, permission control, and privacy protection.
The biggest advantage of this architecture is:
First: Data privacy (privacy computing, zero-knowledge proof).
Second: On-chain compliance (KYC/AML mechanism integration).
Third: Cross-chain interoperability (compatible with Ethereum and others).
Five, Legal and Compliance: Building a multi-tiered legal protection system.
The compliance review of RWA issuance includes:
Asset legality: Ensure no ownership disputes;
Issuance compliance: Complying with mainland, Hong Kong, and international laws (such as MiCA, FATF);
Contract agreement: Covering asset description, issuance terms, revenue distribution, default handling, and other details;
Tax compliance: Need to coordinate tax arrangements for Hong Kong, mainland, and investor jurisdictions.
Six, steps for implementing RWA issuance.
Current issues and development prospects of RWA.
The emergence of RWA has established a connection between digital currencies and physical assets.
From the current situation of RWA issuance, there are still some issues:
Regulatory lag: The existing regulatory system has not adapted to the rapid development of RWA practices, lacking a clear legal framework, leading projects to face high compliance risks.
High issuance threshold: Currently, the issuers of RWA are mostly large institutions with strong capital, making it difficult for small and medium-sized enterprises and traditional financing-restricted parties to obtain funds through RWA.
Limited asset selection: Although RWA theoretically supports various assets, successful issuance projects are concentrated in certain specific fields, such as real estate or high-credit debt, and the types of assets remain relatively singular.
High issuance costs: Actual financing costs are generally high, with some projects' issuance costs even reaching 10%, weakening the attractiveness of its 'low-cost financing' concept.
Single investor structure: Although technically, global investors can participate in RWA through digital wallets, actual investors are mostly professionals familiar with digital assets, with traditional institutions limited in participation due to compliance and awareness barriers.
Cumbersome pre-chain review: Asset evaluation, auditing, compliance, and other processes are almost indistinguishable from traditional finance, failing to demonstrate the 'fast and convenient' technical advantages.
Insufficient ecosystem construction: The RWA support capability of blockchain platforms is not yet perfect, the issuance process is complex, and the number of related service institutions is limited, leaving the ecosystem to be improved.
Traditional investment decision mechanism: Investors still rely on the issuer's credit for decision-making, failing to fully judge based on the on-chain asset's performance. This is limited by insufficient on-chain data and a lack of professional analytical tools.
The future development potential of RWA is enormous.
The regulatory framework is becoming increasingly clear: Regulatory agencies in various countries will gradually establish guidelines and compliance paths related to RWA, providing legal basis and a controllable risk environment for RWA issuance.
The threshold for issuance is gradually decreasing: After the technological infrastructure and smart contract standards mature, more small and medium-sized institutions will have the opportunity to finance through RWA.
Asset types are becoming increasingly diverse: In the future, a variety of real assets such as supply chain finance, accounts receivable, and commodity notes will be supported on-chain, enriching the RWA ecosystem.
Investors are becoming increasingly sophisticated: With the popularization of digital asset awareness and the promotion of Web 3.0 education, the investor base will expand, and the use of AI and data tools will enhance risk judgment capabilities.
On-chain data drives decision-making: Investment decision logic will shift from 'trust the issuer' to 'trust on-chain data', analyzing asset historical performance and transparent information to modernize the risk pricing mechanism.
RWA is the protagonist of this market, becoming a new model for financing physical assets under Web 3.0.
1. Deepening technological integration.
AI + RWA: Plume Network collaborates with 0G to launch 'RWAI Agency', automating asset tokenization and on-chain treasury management through AI to reduce human intervention costs.
Cross-chain interoperability: The Converge public chain supports a combination of Rust and Solidity contracts, achieving seamless integration of institutional-level assets and DeFi protocols.
2. Expansion of asset categories.
Environmental assets: Tokenization of carbon credits and green energy revenue rights (e.g., photovoltaic power stations).
Non-standard assets: Artworks, luxury goods (such as tokenized Rolex watches).
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Finally: Many of the views in this article represent my personal understanding of the market and do not constitute advice for your investments.
