Discussing the Development Prospects and Regulatory Challenges of RWA in Hong Kong

Recently, three experts from well-known virtual asset institutions in Hong Kong conducted an in-depth discussion on the regulation, market prospects, and investment value of RWA( real-world assets).

Regulatory Principles of RWA

Experts unanimously believe that Hong Kong's regulation of RWA follows the "same principle". Regulators tend to determine the regulatory approach based on the nature of the underlying assets, rather than treating all tokenized assets as virtual assets. This means that if the underlying assets are traditional financial products such as stocks or bonds, the existing securities regulatory framework may be applied.

Whether to open RWA products to retail investors depends on the nature of the underlying assets, experts say. If the product is originally allowed for retail investment, its tokenized version should also be open to retail investors in theory. The reverse is also true.

The Appeal of RWAs to Ordinary Investors

Although purchasing RWA may involve additional transaction costs, experts point out that it still has its appeal:

1. Higher risk-free returns: By combining tokenization and staking mining, RWAs may provide risk-free returns that exceed those of traditional assets.

2. Asset Fragmentation: Allows investors to participate in large asset investments with a lower threshold.

3. Leverage and DeFi Opportunities: Providing investors with additional sources of income.

4. Liquidity Improvement: Compared to traditional assets, RWA may have better liquidity.

Opportunities and Challenges for Regulatory Institutions

For institutions that have obtained regulatory licenses, RWA is both an opportunity and a challenge:

Advantages:

• Compliance provides clients with confidence assurance
• Can serve as a bridge between traditional finance and the crypto world

Challenge:

• KYC/AML requirements may restrict certain sources of funds
• Need to balance regulatory requirements with innovation

Future Development Direction

Experts believe that future development may focus on the following aspects:

1. Develop low-risk RWA products, such as tokenized government bonds, etc.
2. Explore compliant cross-border asset management models
3. Provide traditional financial investment channels for virtual asset holders
4. Strengthen communication with regulatory agencies to promote policy improvement.

Overall, with the gradual clarification of regulatory frameworks and the growth of market demand, the importance of RWA in the Hong Kong financial market is expected to further increase.