Hong Kong RWA Depth Analysis: FAQ Answers from the Frontline

Author: Liu Ye Jing Hong

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Introduction

Recently, I have been deeply involved in several real-world asset (RWA) tokenization projects and conducted in-depth research on related businesses in practice. To facilitate readers' understanding, this article will share some of our core observations and thoughts in a question-and-answer (FAQ) format.

Q1: Why has RWA been so hot recently?

The fundamental reason for the popularity of RWA is the official implementation of the "Stablecoin Regulation" in Hong Kong on August 1, 2025. This marks the full compliance of stablecoins as anchor currencies for transaction settlement. Against the backdrop of the Hong Kong government strongly supporting the compliant issuance of virtual assets, a regulatory framework for a compliant virtual asset market has already taken shape.

From the perspective of market motivation, many enterprises expect that Hong Kong RWA can open up a brand new compliant financing channel. Some listed companies also hope to boost market confidence and stock prices by laying out in this track. This expectation has similarities with certain market sentiments during the early ICO boom.

Q2: What is the difference between Hong Kong RWA and Web3 RWA?

The differences are very significant, and there is even no direct business connection between the two.

The core of RWA in Hong Kong is "full chain compliance." The underlying assets need to meet the legal requirements of both regions, namely compliance in the location of the assets (such as the mainland) and compliance in Hong Kong. This compliance requirement is far beyond what can be met by the technical level of "consortium chain confirmation"; it must be based on documents with clear legal effect. For example, data assets need to complete compliance exit filings, while physical assets need to go through compliance exit transfer procedures.

There is a common assumption in the market, for example, that after the on-chain confirmation of property rights in mainland real estate, RWA will be issued in Hong Kong. However, under the current framework, this path is completely unfeasible. Firstly, the Hong Kong Securities and Futures Commission (SFC) explicitly prohibits automated matching trades on the blockchain; secondly, the complete transfer of property rights of mainland real estate to Hong Kong faces enormous legal and practical obstacles.

Currently, the forms of RWA officially encouraged by the Hong Kong Monetary Authority (HKMA) mainly focus on stablecoins and tokenized bonds (such as government-issued green bonds). The operational model for a broader range of physical RWAs is still unclear, but it is certain that regulators do not accept models that issue assets solely based on blockchain confirmation; assets must be fully placed under Hong Kong's regulatory framework.

Therefore, Hong Kong RWA emphasizes its nature as a "regulated distributed ledger" in the application of blockchain technology, rather than the global free trading and circulation pursued by Web3 RWA.

Q3: How to understand Hong Kong RWA in simple terms?

At the current stage, Hong Kong RWA can be understood as a "futures market that allows private compliant issuance."

Just as crude oil futures require designated storage locations to hold and deliver physical crude oil, Hong Kong RWA also mandates that its underlying assets must be in a state that can be effectively regulated by Hong Kong financial regulatory authorities. If the underlying physical assets of an RWA cannot be regulated, it is highly likely that it will not be approved for issuance. For example, creating an RWA from rental income of properties located outside of Hong Kong is unlikely to be approved, as both the properties themselves and the leasing contracts cannot be directly regulated by Hong Kong.

On the contrary, some intangible assets, such as entertainment copyrights, have a greater possibility. As long as these assets have clear ownership and compliance under mainland laws, and their rights can be legally transferred to a regulatory entity in Hong Kong, their future revenues may be used to issue RWA.

It is worth noting that the Hong Kong government does not currently require the underlying assets of RWA to be located within Hong Kong; the core requirement is that the assets can be "regulated by the Hong Kong government." Based on this, I predict that even if a high-quality asset is not located in Hong Kong, there is still a possibility of approval for issuance if it can provide a complete set of credible evidence that meets Hong Kong regulatory requirements (for example, a continuous audit report issued by one of the "Big Four" accounting firms).

Q4: Can I trade after RWA is issued?

No. Issuing RWA and trading RWA are completely independent matters.

Issuing RWA is closer to a fundraising activity. Once the issuance application is approved, the issuer can raise funds from "qualified investors" (Professional Investor). However, this does not mean that the tokens can be publicly traded.

To achieve trading, according to the regulatory red lines set by the Hong Kong Securities and Futures Commission (SFC), RWA tokens are strictly prohibited from automated matching transactions on the blockchain. The only path is to apply for listing on a licensed virtual asset trading platform (VASP) in Hong Kong.

In addition, these compliant virtual asset trading platforms are only open to qualified investors, which essentially eliminates the possibility of attracting a large number of retail investors through community marketing hype, which is in stark contrast to the operation model of certain crypto assets (such as Meme coins). At the same time, listing and trading on compliant platforms is also expected to incur significant costs.

Q5: What about the issuance of compliant stablecoins in Hong Kong?

Among all RWA categories, the feasibility of issuing compliant stablecoins is the highest, especially stablecoins issued based on high-quality assets such as Hong Kong dollars, offshore renminbi, US dollars, or high credit rating bonds.

Of course, the threshold is also extremely high. Without discussing the complicated compliance processes, just the cost of capital alone poses a very high entry barrier for the vast majority of startups. According to the "Stablecoin Regulation", the issuing entity needs to actually pay in a minimum of 25 million Hong Kong dollars as paid-in capital and is subject to concentrated supervision by the Monetary Authority. In addition, the issued stablecoins must have 100% high-quality liquid assets as reserve backing.

Q6: Can consortium blockchain technology be used to issue Hong Kong RWA?

This is a significant misconception that has been common recently. The application scenarios of domestic alliance chains (such as rights confirmation and traceability) are completely unrelated to the compliance requirements of RWA in Hong Kong, yet some business leaders we encounter often confuse the two.

The legal validity of the RWA project in Hong Kong entirely depends on the clarity of ownership and the authenticity of the underlying asset's value. According to the analysis by legal experts in Hong Kong, issuers must fulfill strict due diligence obligations, including:

Legal document verification: Confirm that the asset is free of any encumbrances through property registration documents, judicial statements, etc.

Financial penetration audit: Entrust licensed auditing institutions to verify the cash flow, liabilities, etc. of assets to prevent financial fraud.

Independent third-party valuation: For non-standard assets, various models must be used for valuation endorsement by an independent appraisal agency.

In short, the Hong Kong RWA project only recognizes legally binding documents and the review results of licensed third-party institutions, and does not accept "on-chain confirmation" at the technical level as the basis for legal validity.

Q7: What is the purpose of issuing RWA in Hong Kong?

In the author's view, for legitimate enterprises, there are mainly two core functions: first, to expand new compliant financing channels for quality assets; second, for listed companies, it can serve as a positive signal to boost market confidence.

However, it is important to be vigilant that there are many participants in the current market who treat RWA as a speculative narrative. Their true intention may not be to achieve compliant issuance, but rather to use this hot concept for private financing or market speculation. Such phenomena are not uncommon in the industry and deserve high vigilance from investors and practitioners.

Summary

In summary, Hong Kong RWA is a very new field, with only a handful of successful cases. Therefore, the views presented in this article may still have limitations, and the author will continue to update their understanding as they gain deeper insights into the business. This article serves only as a personal record of insights at the current stage, hoping to provide some valuable references for colleagues interested in this field.