Reprinted: Oliver, Mars Finance
In 2025, the Web3 community will not lack 'trending topics'. Following DeFi, NFTs, the metaverse, and memes, RWA has suddenly become a top trend—everywhere you see slogans like 'asset on-chain reconstructs the financial system' and 'trillion-dollar market new blue ocean', various RWA industry associations, summits, alliances, and forums proliferate like cancer cells, outnumbering genuine RWA projects by dozens of times. 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 bucket of cold water: when you shout 'RWA assets on-chain', you might not even know what you are talking about.
First, break the first myth: RWA is not a 'new species'; it is merely '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 your stock software, and the bonds in your bank app are essentially all 'real asset tokenization'—stocks are digital certificates of equity, funds are certificates of asset portfolios, and bonds are electronic records of debt. The only difference is: traditional financial tokens exist in centralized databases of banks and brokers, while RWA tokens exist in decentralized ledgers on blockchains. It's like switching the ledger from Excel to Google Docs; the core remains bookkeeping, just the way of bookkeeping has changed.
But now many people talk about this as if 'humanity has discovered fire for the first time': 'Wow! Blockchain allows assets to go on-chain!' Please, stocks achieved 'asset tokenization' back in the 17th century, but back then it was through paper certificates, which later transitioned to electronic data. Essentially, RWA is 'tokenization 2.0', moving certificates from centralized databases onto the chain, with added characteristics of immutability and decentralized verification, but the underlying logic remains 'using digital certificates to represent rights'.
To put it bluntly: if you buy Tencent stock, the brokerage app shows you hold 100 shares, and these 100 shares are the tokens of Tencent equity stored in the broker's database; if Tencent issues RWA equity, you receive 100 tokens on the blockchain, which essentially still represent those 100 shares of equity, with the difference being that these tokens can circulate on-chain, while traditional stocks can only be transferred at the exchange. So don't mythologize RWA; it does not 'create new assets', but rather 'gives old assets a cooler ledger'.
90% of people misunderstand the point: the essence of RWA is not 'data going on-chain', nor is it 'assets going on-chain', but rather 'rights certificates going on-chain'.
Now, everywhere you hear the nonsense 'data on-chain = assets on-chain'. Some people say: 'I scanned the property certificate into a PDF and put it on-chain; this house has become RWA!' Wake up, you could upload 100 pictures of the property certificate to the blockchain, but the house is still registered in the housing authority's system, with no connection to the on-chain data. Data is just 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, which is a right granted by law.
Some people boast: 'Our tokens map 1:1 to real assets; holding a token equals owning the asset!' What's the difference from a child playing house? You draw a 'one million token' representing the convenience store downstairs; does that mean the convenience store belongs to you? Without legal endorsement, any 'mapping' is just a castle in the air. The core of RWA is not to move the assets themselves onto the chain (houses cannot be moved, equity cannot be moved), but to tokenize the 'rights certificate proving asset ownership'—for instance, converting legally recognized rights certificates such as stocks, bonds, and property rights certificates into on-chain tokens.
Key point: The essence of an asset is 'rights', and the carrier of rights is 'legally recognized certificates'. Movable properties rely on contracts and invoices, real estate relies on property certificates, equity relies on shareholder registries, and debt relies on debt contracts. What RWA aims to do is to repackage these 'legally protected certificates' using blockchain technology, making the circulation of certificates more efficient and transparent, but the prerequisite is: first have rights under a legal framework, then have tokens on the chain. If you skip over the law and talk about 'assets going on-chain', it is just pure trickery.
Don't treat 'going on-chain' as the 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 father of the code. Holding a Bitcoin private key means you own Bitcoin 100% because the 'rights' of Bitcoin are entirely defined by the blockchain code; however, RWA tokens represent real assets, and the rights to those 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 and sue in a US court—first, the US court must see if this token is recognized as a legitimate rights certificate under local law. Do you qualify as a 'qualified investor' under US regulations? Did your purchase process comply with US securities laws?
To give a more painful example: domestically, someone tokenized a property in Beijing and issued 1000 tokens, each representing 0.1% of the property rights.
However, according to Chinese law, property rights changes must be registered at the real estate registration center; the on-chain token circulation does not count. If one day the owner sells the house, the token holder goes to court for their rights, the court will only look at the property certificate, not the blockchain record—because the law does not recognize the legitimacy 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 legitimate rights certificates within the real legal system? This requires solving three key problems:
1. Rights anchoring: Tokens must correspond to rights protected by law in reality (such as equity, debt, property rights), rather than being 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 and financial regulations in Hong Kong), otherwise, it is considered illegal issuance of securities.
3. Dispute resolution: When disputes arise regarding the rights represented by tokens, can the legal system recognize on-chain records as evidence and protect the rights of holders?
Those who discuss RWA without considering the law are either clueless novices or deceptive fraudsters—after all, the slogan of 'decentralization and global circulation' sounds much better than 'first comply with regulations in various countries'.
Essentially, RWA is a financial product; don't be misled by 'decentralization'.
Many people hype RWA as a 'disruptive financial tool', claiming it allows ordinary people to invest in overseas real estate, top private equity, and art. But the truth is: RWA is merely the tokenization of financial instruments, and finance inherently carries regional and regulatory constraints.
First, all RWAs are 'financial products'. Whether it is property mortgage bonds, corporate receivables, or fund shares, they are essentially tools 'to make money work for money', and must comply with the core logic of financial regulation: protecting investors, preventing risks, and maintaining market stability. For example, in the US, investors purchasing RWA securities must be 'qualified investors', while in China, financial products must be approved and cannot illegally raise funds from the public. Projects claiming 'anyone can buy RWA' are either engaging in illegal fundraising or playing dangerous games of 'regulatory arbitrage'.
Secondly, the regional nature of finance makes it difficult for RWA to achieve 'global circulation'. An RWA token for real estate issued in the US may be considered 'overseas securities' in China and cannot be sold to Chinese investors without approval; similarly, an RWA for corporate debt in China may be unavailable for purchase by US investors due to regulatory restrictions. Even if global circulation is technically realized, 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 cost of cross-border litigation, the question of 'whether US courts recognize the legality of your holding the token' is already a major problem.
More realistically, financial risks do not disappear just because of 'going on-chain'. Credit risk, market risk, and liquidity risk in traditional finance still exist in RWA and may even become more concealed due to 'decentralization'. For instance, an RWA project issues tokens backed by fraudulent assets; the immutable characteristics of the blockchain may make the scam harder to expose—after all, the data is real, but the assets are fake.
Beware of 'RWA bubble': 99% of the discussions are just empty talk; the difficulty lies in the 'last mile'.
The current RWA circle resembles the ICO boom of 2017: various white papers flying around, more intermediaries than landing cases, and industry associations outnumbering project parties. Yet, very few can present compliant, actionable RWA cases. Why? Because the landing of RWA requires crossing three 'ghost gates':
First hurdle: Legal compliance hurdle.
This is the toughest hurdle. Taking the United States as an example, the SEC views most RWAs as 'securities' that must comply with securities laws, complete registration, or obtain exemptions; otherwise, it is illegal. This means project parties need to hire top legal teams, spend millions of dollars to finalize legal documents, and pass the review of regulatory agencies. The situation is stricter domestically; any behavior involving 'asset securitization' or 'financial product issuance' must be approved by financial regulatory departments, and unauthorized issuance may be suspected of illegal public deposit absorption.
Second hurdle: Asset penetration hurdle.
To gain the trust of investors, RWA must address the issue of 'asset authenticity'. For example, for a real estate RWA, does the on-chain token truly correspond to a real property? Is the property title clear? Is there a mortgage? This requires professional asset evaluation, due diligence, and legal rights confirmation, rather than relying on the 'smart contract automatic execution' mentioned in the white paper. Many projects claim 'being on-chain means confirmed rights', but in reality, property rights confirmation requires significant effort, and blockchain merely records the results without replacing offline legal processes.
Third hurdle: Investor protection
Traditional finance has a mature investor protection mechanism, such as regulation by the securities regulatory commission, bank custody, and risk warnings. But what about RWA? In a decentralized structure, who supervises the project parties? Who guarantees the investors' right to know and redemption rights? If the token price crashes, can investors redeem it like mutual funds? If the underlying asset is fraudulent, do investors have channels to defend their rights? Until these issues are resolved, RWA will always be just a 'castle in the air'.
Ironically, many current RWA projects are playing tricks to evade regulation: for example, placing the issuing entity in the Cayman Islands, using 'decentralized autonomous organization (DAO)' to evade legal responsibility, claiming 'not subject to any national regulation'. But the reality is, as long as you target investors from specific countries, you must comply with local laws—DAO is not a lawless land, and tokens are not 'get out of jail free' cards.
The future of RWA: Tear off the 'myth' label and return to the essence of 'tools'.
Saying all this does not deny the value of RWA. On the contrary, RWA indeed has immense potential: it can improve asset circulation efficiency, reduce financing costs, and provide liquidity for niche assets, such as art shares, real estate investment trusts (REITs), and corporate receivables. But the prerequisite is: remove the 'blockchain is omnipotent' filter and honestly solve the core issues of law, regulation, and compliance.
The future of RWA should look like this:
Compliance first: Issue within a specific legal framework, such as the US Reg D private placement exemption or China's asset securitization pilot, first become a 'legal financial instrument', then talk about 'on-chain innovation'.
Technical assistance: Blockchain is used to improve the efficiency of certificate circulation and enhance transparency, not to overturn the legal system. For example, 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, such as funds, bonds, commercial paper, and REITs. These assets have clear legal relationships and mature regulatory frameworks, making them easier to land. Instead of jumping into 'real estate fragmentation' or 'art piece splitting', which are high complexity and high regulatory risk areas.
Most importantly, investors need to be clear: 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, global circulation' are either clueless novices or fraudulent scams—real RWA players are quietly engaging with regulatory agencies in various countries, not shouting slogans on social media.
Conclusion: Don't be misled by 'going on-chain'; see through the essence of RWA.
Returning to the initial question: what are we really discussing when we talk about RWA assets going on-chain? It is not a technological gimmick of data going on-chain, nor a utopia of global asset circulation, but a 'compliance revolution using blockchain technology to reconstruct the rights certificate system'. The core of this revolution is not technology, but law; not decentralization, but regulatory compatibility; not the creation of new assets, but making old assets circulate more efficiently.
Those who discuss RWA outside the scope of law are like building skyscrapers 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, the mapping of rights between assets and tokens, and the specific terms protecting investors—not in the pretty words like 'disrupt', 'reconstruct', and 'trillion-dollar market' found in white papers.
Next time someone tells you 'RWA asset on-chain is going to change the world', feel free to 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 real assets, rather than just air?
3. If the asset defaults, what legal channels do you, as an investor, have to defend your rights?
The answer lies in these three questions. The story of RWA has just begun, but only by stripping away the 'myth' packaging can we see the real value—or the bubble.
