Author: Crypto Miao

RWA (Real-World Assets) refers to the process of converting physical or traditional financial assets in the real world—such as stocks, real estate, bonds, commodities, currencies, and even machinery—into digital tokens through blockchain technology. These tokenized assets are brought into the decentralized finance (DeFi) ecosystem, enhancing the liquidity, transparency, and accessibility of assets, while unlocking new areas for investors that are difficult to reach in traditional finance. The rise of RWA is reshaping the global investment landscape, injecting new vitality into innovation and wealth growth.

In recent years, the RWA tokenization market has rapidly emerged. According to industry forecasts, by the end of 2025, its global market size is expected to exceed $50 billion, with long-term potential reaching as high as $18.9 trillion. As a pioneer in the RWA field, the United States, with its mature financial market and clear regulatory framework, has attracted significant attention from institutions and investors, becoming a bellwether for this trend. However, behind the opportunities, compliance remains a core challenge that cannot be ignored.

For investors in mainland China, participating in RWA investments is both attractive and requires caution. Due to the varying regulatory environments in the Web3 industry across countries, investors must comply with both domestic and international laws and regulations. This includes, but is not limited to, anti-money laundering (AML) and know your customer (KYC) requirements, strict capital control policies, and tax reporting and regulatory requirements related to digital assets.

This article will focus on RWA asset investment, delving into the compliance points for mainland investors to help readers embrace opportunities while avoiding potential risks.

Global Trends in RWA

According to data from the Security Token Market, by the end of 2024, over $50 billion in assets will have been tokenized globally, with real estate accounting for $30 billion. As more institutions adopt blockchain technology, these numbers are expected to soar significantly by 2025. In the long term, the RWA market is projected to reach $18.9 trillion by 2033, demonstrating immense development potential.

2025 is seen as a critical turning point for RWA development, as the market transitions from the experimental phase to practical application, with institutional participation and the maturity of regulatory frameworks becoming the main driving forces.

1. United States

In the United States, the RWA tokenization market is thriving, with a projected market size of $50 billion by the end of 2025, primarily driven by U.S. Treasury bonds. The U.S. market benefits from a stable regulatory environment and institutional participation. The SEC has issued guidance on the registration of tokenized securities; for example, in a speech on May 8, 2025, the SEC considered potential exemptions allowing the issuance, trading, and settlement of securities using distributed ledger technology (DLT).

Large financial institutions such as BlackRock and JPMorgan are also actively positioning themselves, with BlackRock's BUIDL fund launching in March 2024, attracting over $460 million in funding. Robinhood submitted a 42-page proposal in April 2025, calling for the establishment of a federal regulatory framework, marking a key step in the integration of traditional finance and blockchain.

2. European Union

The European Union's Markets in Crypto-Assets Regulation (MiCA) came into full effect on December 30, 2024, providing a comprehensive regulatory framework for crypto assets, including RWA. MiCA covers the issuance of asset-referenced tokens (ARTs) and electronic money tokens (EMTs), aiming to balance transparency, security, and innovation, promoting the widespread application of RWA in Europe. In 2025, the EU will continue to refine Level 2 and Level 3 measures to ensure the implementation of the regulatory framework.

3. Singapore

As a global hub for blockchain and fintech, Singapore is showing strong momentum in the RWA tokenization space. The Monetary Authority of Singapore (MAS) has issued guidelines for the issuance and custody of digital payment tokens (including RWA), such as the final response released in November 2023, which details business conduct and consumer protection measures.

Companies like Emurgo, Helix, and D3 Labs are thriving here, with InvestaX, a leading tokenization SaaS platform, obtaining MAS licensing, further promoting the construction of the RWA ecosystem.

4. Hong Kong

Hong Kong, with its status as an Asian financial center, shows significant potential in the RWA tokenization field. The SFC and HKMA are actively promoting the development of digital assets and RWA tokenization through forward-looking policies.

During the 2025 Web3 Festival, RWA tokenization became a focal point of discussion, with an expected increase in projects in the real estate and financial securities sectors. OKG Research predicts that non-stablecoin tokenized assets in Hong Kong will exceed $30 billion by 2025.

5. Other Asian Countries

Thailand: Bangkok will host the ONCHAIN 2025 conference on April 25, 2025, the first conference in Asia focused on RWA, attracting over 200 leaders from traditional finance, fintech, and Web3 to discuss trends, regulations, and innovations in RWA, such as D3 Labs' Seaseed cross-border financial solution and Helix's RWA DeFi protocol.

Japan: Saison Capital, a venture capital fund backed by Tokyo-listed financial services giant Credit Saison, participated in ONCHAIN 2025, indicating that Japan is also actively exploring the potential of RWA.

Current Status of RWA Development in Mainland China

In mainland China, the tokenization of physical assets (RWA) is currently in a regulatory "gray area," lacking a clear legal and policy framework. In terms of blockchain and related derivative technologies and financial regulation, the implementation of RWA in China mainly faces obstacles related to the homogenization of token issuance and circulation.

According to the "Announcement on Preventing Risks of Token Issuance Financing" jointly issued by the People's Bank of China, the Central Cyberspace Administration, and other seven departments (referred to as the "9.4 Announcement"), it states that financing entities raising funds from investors through the illegal sale and circulation of tokens (including virtual currencies such as Bitcoin and Ethereum) is essentially an "unauthorized illegal public financing activity." RWA projects may be regarded as securities or financial products, subject to strict issuance and trading requirements; unauthorized public issuance may be deemed illegal fundraising.

RWA assets within mainland China often adopt strategies such as overseas issuance, using non-cryptocurrency digital assets, or focusing on specific areas (such as supply chain finance) to avoid compliance risks. However, the protective effect of these measures is limited. Regulatory agencies may "look through the form to the substance," classifying related activities as financial behavior, and overseas issuance cannot completely evade regulatory reach in mainland China. Cross-border issuance must meet legal requirements in both mainland China and overseas, increasing the complexity of compliance.

The uncertainty of regulation leads project parties and investors to face multiple compliance risks. Investors need to carefully assess the risks of participating in RWA projects to avoid losses due to policy changes or legal liabilities.

Advantages of Asset Tokenization

Asset tokenization not only provides a decentralized and trust-minimized alternative to replace real-world products, investment tools, or services but also brings numerous significant advantages. By utilizing blockchain technology to tokenize real-world assets, it can enhance the value, accessibility, and utility of assets while creating conditions for broader applications of off-chain data in the decentralized finance (DeFi) ecosystem. Here are the core advantages of asset tokenization:

1. Increased Liquidity

In traditional markets, financial events are often recorded in separate ledgers, leading to inefficiencies such as increased transaction costs and extended settlement times. The lack of interoperability between different systems further exacerbates the fragmentation of liquidity. Asset tokenization effectively addresses this issue by creating interoperable tokenized assets.

Moreover, tokenization can transform traditionally illiquid assets (such as real estate or artwork) into millions or even billions of tokens, enabling fractional ownership. These tokens can be listed and traded on widely circulated exchanges, eliminating the need for high-cost trading intermediaries, significantly expanding the potential buyer base, thereby enhancing asset liquidity and market efficiency.

2. Enhanced Accessibility

Many high-yield assets are out of reach for ordinary investors due to financial or regulatory barriers. For example, film financing often involves high upfront costs and budget overruns, allowing only the wealthiest investors to participate. However, a successful film can yield multiple returns in a short time. Similar investment opportunities include purchasing and leasing collectible cars, distressed overseas assets, or multi-family properties.

Tokenization breaks down these barriers through a crowdfunding-like model. Investors can purchase tokens linked to assets, allowing them to participate in asset classes that were previously difficult to access with lower capital. This approach not only lowers the investment threshold but also provides a broader group of investors with the opportunity to share in economic returns.

3. Improved Transparency

High-value assets often lack reliable and easily accessible information, such as income records, ownership history, or sales data. This opacity is particularly pronounced when assessing foreign assets or when buyers cannot inspect assets in person. Tokenization leverages the transparency and immutability of blockchain to provide a solution.

Through tokenization, ownership records, interest, or dividend returns can be publicly tracked and audited, depending on the logic of the smart contracts binding the assets. This traceability feature minimizes the risk of forgery and fraud, especially applicable to high-priced luxury goods such as wine and caviar, as well as in fashion and art, thereby enhancing the security and credibility of investments.

4. Unlocking Composability

One of the most promising advantages of asset tokenization is its composability with the DeFi ecosystem. By bringing the value of real-world assets into decentralized finance, users can benefit from interest generated by off-chain collateral. For example, decentralized money markets built around tokenized assets not only enhance liquidity in the DeFi space but also provide retail investors with new avenues to access high-end investment categories.

In the future, tokenization will bring more innovative opportunities for smart contract developers. By combining tokens linked to different assets, entirely new synthetic assets, indices, or token baskets can be created. The ability to convert real-world income streams into collateral will further drive the rapid development of the DeFi ecosystem, unlocking unprecedented potential.

Nature of RWA Assets

RWA digitizes and records tangible or intangible assets (such as stocks, bonds, real estate, etc.) from the real world through tokenization and trades them via blockchain or exchanges. This process provides RWA assets with liquidity, transparency, and accessibility, but also brings legal and regulatory complexities.

1. Classification of RWA Asset Attributes

The classification of RWA asset attributes is primarily based on the type of underlying assets and the legal structure of tokenization. Generally, the underlying assets of RWA can be divided into the following categories:

• Securities: This includes financial instruments such as stocks, bonds, and ABS, which typically represent ownership or debt relationships.
• Real Assets: This includes tangible assets such as real estate and commodities, emphasizing their physical existence and utility value.
• Intangible Assets: Such as intellectual property and copyrights, which reflect economic value rather than physical form.

After tokenization, the legal classification may change, especially regarding whether they are regulated as securities.

If the tokenized assets are designed as tradable investment tools (e.g., split into smaller shares), similar to REITs or ABS, they may be classified as securities by regulatory bodies (such as the U.S. SEC) and must comply with relevant securities laws. Therefore, tokenized RWA assets in the U.S. market must adapt to existing securities laws and face regulatory challenges.

2. Specific Asset Analysis

Due to varying laws and policies regarding RWA in different countries, this analysis focuses on the most representative U.S. regulations.

Tokenized US Stocks

In the U.S., tokenized U.S. stocks are typically regarded as securities because they represent an investment in company ownership, similar to traditional stocks. Since asset tokenization usually involves converting ownership or rights into tradable on-chain tokens, stocks, as a typical representation of financial assets, are still considered securities after tokenization.

Tokenized US Bonds

Tokenized U.S. bonds are generally viewed as debt securities because bonds themselves are a form of debt instrument, retaining their debt nature after tokenization. The classification of tokenized assets is closely related to the underlying assets; tokenized U.S. bonds, representing government or corporate debt, are still considered securities, specifically classified as bonds.

Tokenized Real Estate

Tokenized real estate projects are usually regarded as real estate, but their classification is contentious. If the tokenization structure allows real estate to be split into smaller shares and traded freely, it may be viewed as securities. Additionally, tokenized real estate may involve compliance issues with securities laws, especially under the definition of investment contracts.

On the other hand, if tokenization merely represents direct ownership without involving the distribution of investment returns, it may be classified as a real asset. Regulatory frameworks in different jurisdictions may lead to classification differences; for example, the U.S. may view it as securities, while some European countries may lean towards classifying it as real assets.

3. Asset Attributes After Tokenization

After tokenization, RWA is typically regarded as financial assets because they can be traded and managed through digital platforms, possessing characteristics of financial instruments. The tokenization of assets enhances liquidity, allowing more people to participate in high-value asset investments, making them more akin to financial assets.

However, tokenization does not change the essence of the underlying assets. For example:

• Tokenized stocks are still stocks (securities), representing company ownership.
• Tokenized bonds are still bonds (debt instruments), representing creditor relationships.
• Tokenized real estate is still real estate (real assets), but may be structured as tradable financial instruments.

In the U.S., the SEC may use the Howey Test to determine whether tokenized assets constitute investment contracts, thus classifying them as securities. This test is significant in the financial and cryptocurrency sectors, especially when assessing whether new tokenized assets are subject to securities regulation.

The four elements of the test are as follows:

• Investment of money: Investors must invest money, tangible assets, services, or other forms of value.
• Common enterprise: Investors' funds are pooled with others in a common enterprise or project, typically involving a pool of funds or shared interests.
• Expectation of profits: Investors have a reasonable expectation of financial returns from their investment, such as capital appreciation or dividends.
• Efforts of others: Investors' profits primarily depend on the management, operation, or efforts of the issuer or third parties, rather than their own efforts.

If all four elements are met, the asset is classified as a security. Generally, tokenized RWA assets meet points 1, 2, and 4.

If the issued RWA assets promise dividends, or if investors aim to obtain returns from the asset investment, then point 3, expectation of profits, is satisfied, and the RWA asset should be classified as a security. If the token holders of the issued RWA assets merely serve as proof of ownership, such as for property registration, without entitlement to profit returns from the asset, then point 3 is not satisfied, and it should be classified as a real asset.

Therefore, for most RWA assets with profit returns, they are likely to be viewed as securities in the U.S., while also retaining the attributes of the underlying assets as digital tools.

4. Complexity of Regulatory and Legal Environment

The classification of tokenized RWA is significantly influenced by the regulatory framework.

For example, in the U.S., the SEC has strict requirements for the classification of tokenized assets as securities, which may require registration or seeking exemptions, necessitating a balance between compliance, safety, and robustness. In Europe, data privacy laws such as GDPR may also impact the handling of investor data during the tokenization process, increasing compliance costs. Regulatory differences across jurisdictions may lead to different classifications for the same asset in different regions, posing challenges for global investors and issuers.

The classification of RWA asset attributes depends on the type of underlying assets and the legal structure of tokenization. Tokenized U.S. stocks and bonds are generally viewed as securities, while real estate projects are classified as securities or real assets based on whether they provide returns, with specific classifications needing to consider the regulatory environment.

Participation in RWA Compliance Restrictions

Due to varying regulatory intensity and compliance in the Web3 industry across countries, mainland investors need to adhere to domestic and international laws and regulations related to funds and taxes if they participate.

So, what are the key points for mainland Chinese investors participating in overseas RWA asset investments?

1. Foreign Exchange Control

RWA, as an asset that tokenizes physical or traditional financial assets through blockchain technology, can be purchased directly on the blockchain where the asset is issued or through blockchain exchanges or securities exchanges that support RWA asset trading.

To purchase overseas RWA assets, one must first have foreign currency (such as USD, HKD, etc.) or stablecoins (like USDT, USDC, etc.). If currently holding RMB assets, one needs to exchange currency and purchase stablecoins, which may require attention to compliance with the Foreign Exchange Management Regulations and other relevant laws.

Personal Foreign Exchange Management Restrictions

According to the "Personal Foreign Exchange Management Measures" (State Administration of Foreign Exchange Order [2007] No. 3) and its implementation rules, individuals in mainland China are entitled to a facilitative foreign exchange purchase quota equivalent to $50,000 per year, which can be used for travel, study, and other current account expenditures, but cannot be used for overseas securities investments (such as U.S. stocks, RWA, etc.). Moreover, individuals in mainland China are prohibited from using their own foreign exchange or purchased foreign exchange for overseas securities investments without approval, except through compliant channels such as QDII (Qualified Domestic Institutional Investor).

Foreign Direct Investment (ODI) Foreign Exchange Management Regulations for Enterprises

According to the "Regulations on Foreign Exchange Management of Foreign Direct Investment" (Hui Fa [2009] No. 30) and the Foreign Exchange Management Regulations: Domestic companies must first register with the foreign exchange administration for foreign direct investment (ODI) and submit proof of funding sources, investment plans, and other materials for overseas securities investments. Unauthorized remittance of funds without registration may constitute illegal capital outflow. ODI is typically applicable to physical investments (such as establishing overseas enterprises, mergers, etc.), and if directly used for securities investments, it must comply with QDII or cross-border securities investment pilot policies; otherwise, it may be deemed non-compliant.

Risks of Cross-Border Brokerage and Exchange Operations

According to the "Securities Brokerage Business Management Measures" issued by the CSRC in 2023: Unlicensed operations are prohibited; overseas brokers without licenses in China cannot directly solicit business or provide trading services to domestic investors. Although existing investors can continue trading, the remittance of new funds must comply with foreign exchange management regulations; otherwise, it may be deemed illegal capital outflow.

Domestic investors trading through blockchain exchanges or securities exchanges may be viewed as participating in illegal cross-border securities activities.

Virtual Currency Transactions Are Not Protected

According to the "Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading Speculation," purchasing digital currencies is considered a high-risk behavior, as they are classified as non-legal tender and are not protected by law. Current regulatory policies explicitly prohibit financial institutions from participating in stablecoin-related businesses and have cleared domestic trading platforms. Individuals can only conduct over-the-counter transactions through overseas channels, but may face risks such as contract invalidity, fund security, anti-money laundering monitoring, and tightening policies. Unlike regions like Hong Kong that allow compliant stablecoins, mainland China strictly limits such transactions, and investors must bear potential losses and closely monitor regulatory dynamics to avoid crossing legal red lines.

Compliant Overseas Funds

However, if domestic investors have legal funds overseas, such as personal legal income sources (like salary income, savings, or investment returns) or funds from overseas companies and other entities, they can use these funds to purchase RWA asset tokens, which are not subject to domestic foreign exchange controls and investment restrictions.

2. Tax Policies

How should Chinese residents pay taxes on the gains generated from holding and selling overseas RWA assets according to the tax policies of various countries?

This article takes the purchase of U.S. RWA assets as an example, but since the regulation and tax burden of tokenized assets in the U.S. are still developing, the SEC has recently discussed the regulatory path for RWA tokenization but has not clarified the tax burden details, only discussing it within the existing regulatory framework.

U.S. Tax Burden Analysis

According to the U.S.-China tax treaty, the tax burden on non-resident investors from China investing in RWA assets is primarily withholding tax, including:

• If it is tokenized real estate (such as real estate): According to Articles 6 and 12 of the treaty, its income needs to be taxed in the U.S. Additionally, under FIRPTA (Foreign Investment in Real Property Tax Act), a tax rate of 20% or lower may apply.
• If it is tokenized stocks or bonds: Dividends are subject to a 10% withholding tax limit according to Article 9; interest is subject to a 10% withholding tax limit according to Article 10; capital gains are generally exempt from tax for non-residents unless involving U.S. real estate.

China Tax Burden Analysis

Although China does not have a clear classification for RWA assets, their income can refer to applicable investment income. According to current tax laws, a 20% capital gains tax is levied on overseas investment income, with particularly strict tax audits targeting high-net-worth individuals.

• If RWA is treated as digital assets or referenced against other traditional assets, the sale proceeds may be subject to a 20% capital gains tax, and foreign taxes paid can be declared for exemption.
• If the dividend income from RWA assets is considered separate income, individual income tax should be paid according to the dividend tax, and the 10% withholding tax already paid in the U.S. can be claimed for credit; if the dividend income from RWA assets is included in the RWA asset price, it should be included in investment income for capital gains tax.

According to the CRS (Common Reporting Standard) for the automatic exchange of international tax information, income information of individuals in multiple countries may be exchanged through CRS, aimed at combating tax evasion and avoidance through international cooperation. According to Chinese law, investors have the obligation to actively declare and pay taxes legally and compliantly.

Future Trends

The future trend of RWA tokenization is an important topic in the current fintech field, especially for mainland Chinese investors. Analyzing trends in conjunction with global dynamics and local regulatory environments is particularly crucial.

According to the latest research, the RWA tokenization market is expected to exceed $50 billion by 2025, growing 67% compared to 2024, with real estate and bonds being the main driving forces. By 2030, the RWA tokenization market size could reach $30 trillion, and data from 2025 indicates that this goal is accelerating towards realization. The main growth drivers include the adoption of blockchain by traditional financial institutions and the gradual clarification of the regulatory environment.

The global regulatory framework is gradually improving, with specific regulations introduced in regions such as the UAE, Europe, and Asia, providing legal support for RWA tokenization. For example, regulatory coordination is seen as a key factor in driving market growth. Particularly in the U.S., institutional participation is another major driving force for the development of RWA tokenization. For instance, in 2025, BlackRock seeks regulatory approval for tokenized bonds and stocks, while JPMorgan has launched an internal tokenization platform, demonstrating institutional confidence in RWA.

However, the regulatory environment in mainland China remains in a "gray area," lacking specific policies for RWA. According to analysis by PANews, many mainland projects adopt private or consortium blockchains, and trading platforms are often limited to cultural or digital exchanges.

Conclusion

For mainland Chinese investors, RWA tokenization is both attractive and accompanied by unique challenges. Due to the domestic regulatory environment for the Web3 industry and digital assets still being in a "gray area," and the lack of a clear legal and policy framework, investors need to carefully assess compliance risks when participating in domestic RWA projects to avoid losses due to policy changes or legal liabilities. At the same time, when participating in overseas RWA investments, investors must strictly comply with domestic and international laws and regulations, including foreign exchange controls, tax compliance, and anti-money laundering and KYC requirements.

Despite the compliance challenges, the advantages of RWA tokenization cannot be overlooked. It opens up new possibilities for investors and developers by enhancing liquidity, increasing accessibility, improving transparency, and unlocking the composability of the DeFi ecosystem. In the future, as the global regulatory framework gradually improves and technological innovations continue to advance, mainland Chinese investors can participate in this fintech revolution through compliant channels.

While pursuing returns, investors must remain highly cautious, fully understand and comply with relevant domestic and international laws and regulations, and ensure the safety and compliance of their funds. Only under the dual guarantees of technological innovation and compliance optimization can mainland investors achieve wealth growth in the wave of RWA tokenization while effectively avoiding potential legal and financial risks.

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