Definition of RWA Project Concept and Compliance Discussion

Recently, RWA projects have sparked heated discussions in the Web3 field. Some believe that RWA will reshape the new financial ecology of Hong Kong, but there are differing opinions on the understanding of "what compliance is." This article will explore the conceptual definition of RWA and compliance issues from a professional legal perspective.

1. Definition of RWA Concept

RWA is a financing project that tokenizes real-world assets through blockchain technology. A true RWA project should have the following characteristics:

1. Based on real assets
2. Asset Tokenization on Chain
3. Digital assets have ownership value.
4. The issuance and circulation of tokens are in compliance with legal regulations and are subject to administrative supervision.

RWA projects can be divided into two categories:

1. Narrow RWA: Physical assets on-chain
2. STO: Financial Assets on Chain

Different countries and regions have different standards for the identification of security tokens, and the U.S. SEC uses the Howey Test to make this determination.

2. RWA Project "Compliance" Layering

The compliance of RWA is a layered system:

1. Sandbox Compliance: Such as the Hong Kong Monetary Authority's Ensemble sandbox project
2. Hong Kong Administrative Supervision Compliance: Incorporating into the STO Framework Management
3. Clear regulatory framework for crypto-friendly regions
4. "Pan-Compliance": Temporarily not recognized as non-compliant in certain offshore jurisdictions.

Most projects will attempt the first three paths. Whether Hong Kong can explore the RWA secondary market mechanism will be key.

3. Legal Advice for RWA Projects

1. Choose a policy-friendly jurisdiction
2. The underlying assets must have real redeemable capability.
3. Gain investor recognition
4. Ensure that the operators in the link comply with the regulations.
5. Preventing Post-Compliance Risks
6. Emphasize Brand Reputation Management

4. Conclusion

The RWA projects have different intentions and mechanisms, requiring individual study. The biggest challenge lies in the uncertainty of the system, necessitating the exploration of "practical standards". However, compliance must also be a constant reminder, and respecting the existing legal framework is the fundamental premise for innovation.