Opening remarks
Start a Web3 business, discuss every Wednesday!
(Start-up Web3.0) is a talk show initiated by Mankun Law Firm for Chinese Web3.0 entrepreneurs, held every Wednesday evening, where we invite industry leaders, front-line institutions, and well-known entrepreneurs to the live chat, aiming to foster compliance and healthy development in the Chinese Web3.0 industry through positive voices, rational discussions, and experience sharing.
June is RWA themed month. How can real-world assets (RWA) connect Web3 with the real world under the compliance framework? In this episode, we invite senior lawyer Mao Jiehao from Mankun to have an in-depth dialogue with lawyer Wang Lei. From DePIN to RWA, Lawyer Mao shares the compliance paths in Hong Kong, global regulatory trends, difficulties in exploring domestic assets, and how to empower RWA through standardization and programmability, helping entrepreneurs avoid pitfalls, stay on the right path, and embrace the great era of integration between RWA and traditional finance!
(Audio transcription text has been processed by AI and may contain omissions and errors.)
Welcome this episode's guest, please introduce yourself to everyone!
Wang Lei: Welcome to every Wednesday's (Start-up Web3.0) segment! I am Lawyer Wang Lei, a legal practitioner at Mankun Law Firm, focusing on RWA compliance exploration, hosting this episode following Lawyer Niu Xiaojing. June is RWA themed month, today is the second episode, the theme is 'Current Status of RWA Compliance, Licensing Requirements, and Global Regulatory Trends'. We invited my old partner, senior lawyer Mao Jiehao from Mankun, who has deep experience in Web3 compliance and has participated in multiple RWA projects. Looking forward to Lawyer Mao's straightforward, down-to-earth sharing! If tonight's content is valuable, feel free to share it in your circle, and if there are any questions in the live chat, please leave a message! Now, please let Lawyer Mao introduce himself!
Mao Jiehao: Thank you, Lawyer Wang! Haha, hello everyone, I am Mao Jiehao from Mankun Law Firm, mainly focusing on civil, commercial, and compliance work in the Web3 industry, involving domestic and foreign legal affairs. In the past year, I have been most concerned about the RWA track, studying compliance paths, development potential, and the link between RWA and stablecoins. RWA is not just about asset tokenization, but also a bridge between Web3 and reality. Starting from DePIN, I have been paying attention to the integration of Web2 and Web3 scenarios, gradually deepening my research on RWA. I hope the concepts and practical experiences shared today can help everyone avoid pitfalls! Friends in the live chat are welcome to ask questions and communicate at any time!
Wang Lei: Lawyer Mao is too modest! From DePIN to RWA, the practical experience on the compliance front is very hardcore! Friends in the live chat, get your notebooks ready, tonight's session is packed with valuable content!
Q1: How did you get in touch with RWA? Why are you interested in it?
Wang Lei: Lawyer Mao, you and I have collaborated on projects multiple times, and I particularly trust your expertise in compliance. How did you get in touch with RWA? As a lawyer, why are you so interested in it?
Mao Jiehao: Haha, Lawyer Wang, we are indeed familiar enough not to be nervous, but I still feel a bit nervous when we start broadcasting! My interest in RWA comes from the focus on the integration of Web3 and reality. I first did legal work in the DePIN track and encountered the linkage between Web2 scenarios and Web3, such as the combination of IoT and blockchain.
In 2021-2022, DePIN had not yet become a clear track, but I felt that the pure Web3 internal circulation space was limited, and it must be combined with real assets to go further. The emergence of RWA coincides perfectly with this logic. RWA is not just tokenized assets, but also makes traditional assets programmable through smart contracts, opening up new ways of play, such as fragmentation of revenue rights and cross-border flow. This makes me feel that RWA is a bridge between Web3 and traditional finance, with huge potential. As a lawyer, I study not only compliance paths but also the business models and ecological possibilities of RWA, allowing me to maintain continuous in-depth research.
Q2: What compliance pitfalls are most easily encountered in RWA projects?
Wang Lei: You have accumulated a lot of experience in practical RWA projects. What pitfalls do entrepreneurs most easily fall into? Can you share from a compliance perspective?
Mao Jiehao: The pitfalls of RWA projects mainly focus on three aspects:
1. Asset selection: Not everything can be RWA! Many people immediately ask, 'Can my assets go on-chain?' but compliance, liquidity, and programmability must be assessed first. For example, the US primarily focuses on US Treasury bonds and stocks; BlackRock's US Treasury RWA has reached 3 billion USD, with a clear structure, ensuring compliance before tokenization. Hong Kong, on the other hand, is keen on non-standard assets like new energy and real estate revenue rights due to their closer ties to businesses and individuals. However, compliance for non-standard assets is complex, requiring an assessment of policy risks and market acceptance.
2. Location and tokenization method: Where to issue RWA? Use tokens or NFTs? Hong Kong allows tokenization but requires isolation of domestic assets, setting up SPVs (special purpose vehicles) or fund structures. Offshore issuance has low costs but poor compliance and high risks. Entrepreneurs often overlook regulatory differences in location, making it easy to fall into pitfalls.
3. Investor subscriptions: After tokenization, will investors buy in? Insufficient market predictions are a common problem. Many focus only on issuing tokens, ignoring liquidity needs and investor trust, leading to project cooling.
Compliance is key; entrepreneurs must first ask, 'Is this asset suitable for RWA?' then choose the right location and method, and finally ensure market acceptance.
Wang Lei: The three major pitfalls are assets, location, and subscription. Lawyer Mao's summary is very valuable, 'Not everything can be RWA' has awakened many friends.
Q3: Can RWA be done directly domestically? What are the compliance paths?
Wang Lei: A friend in the live chat asked if RWA can be done directly domestically? What are the compliance paths?
Mao Jiehao: Issuing RWA tokens directly domestically is certainly not possible; issuing coins is a sensitive red line domestically. However, there are alternative paths, such as digital collectibles or digital assets on consortium chains that bind to real rights. For example, a box of mooncakes or a voucher for a bottle of wine can be directly linked to the physical items and made into digital collectibles, similar to on-chain vouchers. This method must ensure specificity (one-to-one binding) and cannot involve non-specific revenue rights or dividends; otherwise, there is a risk of illegal fundraising. Taking wine vouchers as an example, the essence of the voucher is to exchange for physical goods, making it relatively compliant, but the promotion cannot involve investment returns and must strictly control marketing boundaries. Domestic RWA explorations should focus on equity-like assets, combining consortium chains to avoid the red line of tokenization.
Q4: Which assets have the highest compliance difficulty for RWA?
Wang Lei: You have been involved in many RWA projects, which assets or scenarios have the highest compliance difficulty? Can you provide examples?
Mao Jiehao: Assets with high compliance difficulty mainly have two characteristics: complex ownership and strict regulation. For example:
Gold mines: The ownership of gold mines involves mining rights and land rights, and domestic control is strict. After tokenization, ensuring compliance is difficult, and the on-chain rights confirmation does not match the offline regulation, posing a very high risk.
Special assets: Such as cultural relics and restricted circulation state-owned assets, which involve multiple regulations including culture and property rights, making direct RWA conversion nearly impossible.
In contrast, the compliance difficulty of revenue rights assets (such as accounts receivable, real estate rent) is relatively low. For example, Hong Kong's RWA projects often structure accounts receivable into fixed-income products before tokenization, thus avoiding ownership issues. Entrepreneurs must first assess the legal attributes of the assets and then design a compliance structure.
Wang Lei: The difficulty of RWA in gold mines and cultural relics, the examples from Lawyer Mao are very vivid. The revenue rights path opens new ideas for entrepreneurs.
Q5: What is the dividing line between RWA and traditional finance (such as REITs, ABS)?
Wang Lei: RWA is often compared with REITs and ABS; where is the dividing line for compliance paths?
Mao Jiehao: The divide between RWA and traditional finance exists on two levels:
Front end: Asset on-chain standardization: The core of RWA is asset on-chain, which requires clarification on 'which assets can go on', 'by what standards', and 'who will supervise'. For example, RWA projects in Hong Kong must obtain SFC approval, involving KYC/AML and disclosure requirements. Traditional ABS/REITs focus more on corporate credit and ratings, with weaker on-chain components. The standardization of RWA (such as smart contract design and third-party audits) is a new challenge and a compliance focus.
Back end: Programmability of tokens: RWA endows assets with programmability through smart contracts, such as automated revenue distribution and cross-chain transactions, which traditional finance lacks. In terms of compliance, the realizability of tokens (liquidity, default risk) requires a brand new regulatory framework; traditional financial fund and securities regulations cannot fully cover it.
The compliance path for RWA is more complex, but its programmability offers unlimited possibilities, truly linking Web3 with traditional finance.
Wang Lei: Standardization + programmability, Lawyer Mao's analysis of the dividing line is very clear.
Q6: What licenses or qualifications are involved in RWA projects?
Wang Lei: What licenses or qualifications are usually required for RWA projects? How do the requirements differ in places like Hong Kong and Dubai?
Mao Jiehao: There is no exclusive license for RWA; it relies on traditional financial licenses, which differ by region:
Hong Kong: SFC's License 9 (Asset Management) is core; if funds are tokenized, the fund manager qualification is required. Hong Kong's RWA sandbox (Ensemble) allows case-by-case discussions but is not a license and requires support from traditional securities regulations (like Licenses 1 and 4).
Dubai: There is no exclusive RWA license; the first phase of the sandbox (ending in April 2025) allows testing but requires approval from VARA (Virtual Assets Regulatory Authority), involving custody and trading licenses.
Other regions: The US SEC requires RWA to comply with Reg D/S exemptions or register as securities; the EU's MiCA (effective December 2024) categorizes RWA into ARTs (Asset Reference Tokens) and EMTs (Electronic Money Tokens), requiring specific licenses.
The compliance path in Hong Kong is relatively clear, but the process is complex. The current reference is the SPV + fund structure. Entrepreneurs must first clarify the type of assets and then match the licenses.
Q7: What are the compliance obstacles for domestic assets to issue RWA in Hong Kong?
Wang Lei: A friend in the live chat asked what compliance obstacles domestic assets face when issuing RWA in Hong Kong? What are the advantages of offshore issuance?
Mao Jiehao: The main obstacles for domestic assets to issue RWA in Hong Kong are:
Dual regulation: Domestic SPV needs to receive funds, then establish a private fund and token approval in Hong Kong, involving SFC's KYC/AML and disclosure requirements. High costs and complex processes make it difficult for non-large institutions like Ant Group to obtain exemptions.
Asset isolation: Domestic assets cannot directly issue tokens and must be isolated (e.g., through SPV) to ensure they do not touch the red line of issuing coins.
Policy risk: Domestic regulation is strict, revenue rights assets (such as accounts receivable) are relatively easy to go through, while real estate and other immovable assets are limited due to ownership issues.
Offshore issuance has low costs but poor compliance, lacking regulatory recognition, and involves high risks. The compliance path in Hong Kong is safer, suitable for capable teams. I suggest that entrepreneurs choose Hong Kong, leverage professional law firms like Mankun, design SPV + fund structures, and avoid pitfalls.
Q8: Can non-standard assets like artworks and training courses be used as RWA?
Wang Lei: A friend in the live chat asked whether artworks and training courses can be used as RWA? What is the difference from NFTs? Is there a risk of illegal fundraising?
Mao Jiehao: Non-standard assets like artworks and training courses can explore RWA, but the difficulty and compliance requirements differ.
Artworks: Direct tokenization is difficult due to complex ownership, requiring assessment of default risks and investor protections. It can be structured through revenue rights (like lease agreements) before tokenization. Unlike NFTs, RWA focuses more on on-chain liquidity and compliance, while NFTs lean towards collectible value.
Training courses: Similar to digital collectibles, they need to bind specific rights 1:1, such as a one-hour course video, similar to a voucher. Promotions cannot involve investment returns, or else there is a risk of illegal fundraising. Future courses can be viewed as contracts binding digital assets, but revenue rights fragmentation should be approached cautiously to avoid touching red lines.
The key to compliance is specificity (1:1 binding) and marketing boundaries, requiring a clearly designed structure.
Q9: How are global RWA regulatory trends? Which regions are more open?
Mao Jiehao: Global RWA regulatory trends are diverging, with different attitudes in various regions:
Hong Kong: Open and clear, the Stablecoins Ordinance (effective 2025) and the Ensemble sandbox support RWA, with SFC reviewing each case. Green energy and technology assets are favored.
United States: The SEC has strict regulations, requiring registration of securities or Reg D/S exemptions. BlackRock's US Treasury RWA (3 billion USD) serves as a benchmark with a mature compliance path.
European Union: MiCA (effective December 2024) categorizes RWA as ARTs/EMTs, with clear regulation suitable for structured assets.
Singapore: The FSW Act will take effect on June 30, tightening regulations, and even working from home may be illegal. Project parties need to be cautious.
Dubai: The sandbox is flexible, but VARA has high requirements, suitable for large institutions, while small and medium teams face high thresholds.
Open regions: Hong Kong, EU, USA (large institutions); gray areas: Dubai, Singapore (tightening regulations). It is recommended that entrepreneurs refer to successful cases (such as BlackRock, Ant Group), communicate with local regulators, and design compliance paths.
Q10: What advice and insights do you have for RWA entrepreneurs?
Wang Lei: Friends in the live chat are very concerned about how to persist until the explosion of RWA. How do you recharge your belief? What advice do you have for entrepreneurs? Summarize your sharing in one sentence!
Mao Jiehao: RWA is still in its early stages, June 2025 is a starting point, and there may be an explosion between 2027-2030. Stablecoins are key, and after the Hong Kong legislation is implemented in the second half of the year, the volume of fiat-to-stablecoin conversions will determine the progress of RWA. My belief comes from my journey in the industry; from DePIN to RWA, I have seen the compliance frameworks in Hong Kong, Singapore, and the EU gradually become clearer over the past three years. Maintaining curiosity and patience allows me to continue deepening my research. Advice for entrepreneurs:
Focus on familiar areas: Leverage your resources (China, Hong Kong, USA) and focus on compliance-mature tracks like green energy and DeFi.
Learn from successful cases: such as BlackRock's US Treasury and Ant Group's fund RWA, designing SPV + fund structures.
Embrace exploration: RWA is an interdisciplinary track that requires understanding law, technology, and finance. Find partners like Mankun to try and learn together.
One sentence summary: Break out of the limitations of asset tokenization and view RWA from a higher dimension. It is a bridge between Web3 and reality. With patience and in-depth research, you will surely discover your blue ocean!
Wang Lei: Thank you, Lawyer Mao, for more than an hour of valuable sharing! From the three major pitfalls to Hong Kong's compliance paths, from global trends to the exploration of non-standard assets, Lawyer Mao has guided RWA entrepreneurs with practical experience. Next Wednesday, we will continue the RWA theme, discussing the technical implementation paths. Please stay tuned! Thank you, Lawyer Mao, and that’s it for tonight. Good night!
Mao Jiehao: Thank you, Lawyer Wang, and thank you to the friends in the live chat for supporting Mankun. The future of RWA is promising, good night!
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Author of this article: Mankun Branding Department