Author: Crypto Miao

RWA (Real-World Assets) refers to the process of converting real-world physical or traditional financial assets 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, which not only improves the liquidity, transparency and accessibility of assets, but also unlocks new areas for investors that are difficult to reach with traditional finance. The rise of RWA is reshaping the global investment landscape and injecting new vitality into innovation and wealth growth.

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

For mainland Chinese investors, participating in RWA investment is both attractive and prudent. Since the regulatory environment of the Web3 industry varies from country to country, investors must comply with both domestic and foreign 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 regulations related to digital assets.

This article will focus on RWA asset investment and deeply analyze the compliance points for mainland investors to participate in it, helping readers embrace opportunities while avoiding potential risks.

RWA Global Trends

According to the Security Token Market, by the end of 2024, more than $50 billion in assets will have been tokenized globally, of which real estate accounts for $30 billion. As more institutions adopt blockchain technology, these figures are expected to soar in 2025. In the long term, it is expected that the RWA market could reach $18.9 trillion by 2033, showing huge development potential.

2025 is seen as a key turning point in the development of RWA, when the market moves from the experimental stage to practical application, with institutional participation and the maturity of the regulatory framework becoming the main driving forces.

1. United States

In the United States, the RWA (real world asset) tokenization market is booming, with the market size expected to reach $50 billion by the end of 2025, driven mainly by U.S. Treasuries. The U.S. market benefits from a stable regulatory environment and institutional participation. The SEC has issued guidance documents on the registration of tokenized securities, such as the speech on May 8, 2025, in which the SEC considered potential exemptions to allow the use of distributed ledger technology (DLT) to issue, trade and settle securities.

Large financial institutions such as BlackRock and JPMorgan are also actively deploying. BlackRock's BUIDL fund was launched in March 2024, attracting more than US$460 million in funds. 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 EU'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 reference tokens (ARTs) and electronic money tokens (EMTs), aiming to balance transparency, security and innovation and promote the widespread use of RWA in Europe. In 2025, the EU will continue to improve 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 has shown strong momentum in the field of RWA tokenization. MAS has issued guidelines for the issuance and custody of digital payment tokens (including RWA), such as the final response to be released in November 2023, which details business conduct and consumer protection measures.

Companies such as Emurgo, Helix and D3 Labs are thriving here, and InvestaX, as a leading tokenized SaaS platform, has obtained a MAS license, further promoting the construction of the RWA ecosystem.

4. Hong Kong

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

During the 2025 Web3 Festival, RWA tokenization became a focus of discussion, and it is expected that projects in the real estate and financial securities fields will increase. OKG Research predicts that Hong Kong's non-stablecoin tokenized assets will exceed US$30 billion in 2025.

5. Other Asian countries

• Thailand: Bangkok will host the ONCHAIN 2025 conference on April 25, 2025, Asia’s first RWA-focused conference, attracting more than 200 leaders from traditional finance, FinTech, and Web3 to discuss RWA trends, regulation, and innovations 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" and lacks a clear legal and policy framework. In terms of blockchain and related derivative technologies and financial supervision, the main obstacle to the implementation of RWA in China is the issuance and circulation of homogeneous tokens.

According to the Notice on Preventing Risks of Token Issuance and Financing (hereinafter referred to as the 9.4 Notice) jointly issued by the People's Bank of China, the Central Cyberspace Affairs Commission and other seven departments, the so-called "virtual currency" token issuance and financing (ICO), in which the financing subject raises funds from investors (including virtual currencies such as Bitcoin and Ethereum tokens) through illegal issuance and circulation of tokens, is essentially an "unauthorized illegal public financing behavior". RWA projects may be regarded as securities or financial products and must comply with strict issuance and trading requirements. If they are publicly issued without approval, they may be deemed as illegal fundraising.

In order to avoid compliance risks, RWA assets in mainland China often adopt strategies such as overseas issuance, use of non-cryptocurrency digital assets, or focus on specific areas (such as supply chain finance). However, the protective effect of these countermeasures is limited. Regulators may "see the substance through the form" and identify related activities as financial behavior, and overseas issuance cannot completely avoid mainland supervision. Cross-border issuance needs to meet the legal requirements of both mainland China and overseas, which increases the complexity of compliance.

Regulatory uncertainty has led to multiple compliance risks for project owners and investors. 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 many significant advantages. By using blockchain technology to tokenize real-world assets, the value, accessibility and utility of assets can be increased, while creating conditions for the wider application of off-chain data in the decentralized finance (DeFi) ecosystem. The following are the core advantages of asset tokenization:

1. Improve liquidity

In traditional markets, financial events are usually recorded in separate ledgers, resulting in market inefficiencies such as increased transaction costs and longer settlement times. The lack of interoperability between different systems further exacerbates the fragmentation of liquidity. Asset tokenization effectively solves this problem by creating interoperable tokenized assets.

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

2. Enhance accessibility

Many high-yield assets are out of reach for the average investor due to financial or regulatory barriers. For example, film financing often involves high upfront costs and the risk of going over budget, making it accessible only to the wealthiest investors. However, a successful film can generate returns many times over in a short period of time. Similar investment opportunities include collectible sports cars, distressed overseas assets, or the purchase and lease of multi-family properties.

Tokenization breaks these limitations through a model similar to crowdfunding. Investors can purchase tokens pegged to assets, thereby participating in asset classes that are otherwise difficult to access with lower capital. This approach not only lowers the investment threshold, but also provides a wider group of investors with the opportunity to share in economic returns.

3. Improve transparency

High-value assets often lack reliable and accessible information, such as earnings records, ownership history, or sales data. This opacity is particularly acute when evaluating foreign assets or when buyers are unable to inspect the assets in person. Tokenization provides a solution by leveraging the public and immutable nature of blockchain.

Through tokenization, information such as ownership records, interest or dividend returns can be publicly tracked and audited, depending on the smart contract logic bound to the asset. This traceability function minimizes the risk of counterfeiting and fraud, especially for high-priced luxury goods such as wine and caviar, as well as fashion and art, thereby enhancing the security and credibility of investment.

4. Unlocking composability

One of the most promising advantages of asset tokenization is its composability with the DeFi ecosystem. By introducing the value of real-world assets into decentralized finance, users can benefit from the 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 ways to access high-end investment categories.

In the future, tokenization will bring more innovative opportunities to smart contract developers. By combining tokens pegged to different assets, 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 and unleash unprecedented potential.

RWA Asset Nature

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

1. Classification of RWA asset attributes

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

• Securities: include financial instruments such as stocks, bonds, ABS, etc. These assets usually represent ownership or debt relationships.

• Real Assets: including tangible assets such as real estate and commodities, emphasizing their physical existence and use value.

• Intangible Assets: such as intellectual property rights and copyrights, which reflect economic value rather than physical form.

After an asset is tokenized, its legal classification may change, especially in terms of whether it is regulated as a security.

If tokenized assets are designed as tradable investment tools (such as being split into small shares), similar to REITs or ABS, they may be classified as securities by regulators (such as the US SEC) and need to comply with relevant securities laws. Therefore, tokenized RWA assets in the US market need to adapt to existing securities laws and face regulatory challenges.

2. Specific asset analysis

Because the laws and policies regarding RWA may vary from country to country, the most representative U.S. regulations are used as the analysis object.

• Tokenized US Stocks

In the United States, tokenized U.S. stocks are generally considered securities because they represent an investment in company ownership, which is the same as traditional stocks. Since asset tokenization usually involves converting ownership or rights into tradable on-chain tokens, stocks, as a typical representative of financial assets, are still considered securities after tokenization.

• Tokenized US Bonds

Tokenized U.S. Treasury bonds are generally considered debt securities because bonds themselves are a type of debt instrument and retain their debt nature after tokenization. The classification of tokenized assets is closely related to the underlying assets. U.S. Treasury bonds, as a representative of government or corporate debt, are still considered securities after tokenization, but the specific type is bonds.

• Tokenized Real Estate

Tokenized real estate projects are generally considered real estate, but their classification is controversial. If the tokenization structure allows real estate to be split into small shares and traded freely, it may be considered a security. And tokenized real estate may involve securities law compliance issues, especially under the definition of an investment contract.

On the other hand, if tokenization only represents direct ownership and does not involve the distribution of investment income, it may be considered a physical asset. Regulatory frameworks in different jurisdictions may lead to differences in classification, for example, the United States may regard it as a security, while some European countries may prefer the classification of physical assets.

3. Tokenized asset attributes

After tokenization, RWAs are generally considered financial assets because they can be traded and managed through digital platforms and have the characteristics of financial instruments. Tokenization of assets improves liquidity and allows more people to participate in high-value asset investments, making them more like financial assets.

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

• Tokenized shares are still shares (securities) and represent ownership in a company.

• Tokenized bonds are still bonds (debt instruments) and represent creditor-creditor relationships.

• Tokenized real estate is still real estate (a physical asset), but may be structured as a tradable financial instrument.

In the United States, the SEC may use the Howey Test to determine whether tokenized assets constitute investment contracts and are therefore classified as securities. This test is of great significance in the financial and cryptocurrency fields, especially when determining 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, physical objects, services or other forms of value.

• Common enterprise: An investor's funds are combined with others in a business or project, usually involving pooling of funds or sharing of profits.

• Expectation of profits: Investors reasonably expect to receive a financial return from their investment, such as capital appreciation or dividends.

• Profits come from the efforts of others: Investors' profits depend primarily on the management, operation or efforts of the issuer or a third party, rather than the investors themselves.

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

If the RWA assets issued promise dividends, or the investors are seeking to obtain returns on their asset investments, then 3. Expecting profits is met, and the RWA assets should be classified as securities. If the Token holders of the RWA assets issued only use them as a tool to prove the ownership of the assets, such as as a property registration to prove the ownership, and do not enjoy the right to profit returns on the assets, then the third point is not met and they should be classified as physical assets.

Therefore, for most RWA assets with profitable returns, they tend to be regarded as securities in the United States, while retaining the underlying asset attributes as digital tools.

4. Complexity of the regulatory and legal environment

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

For example, in the United States, the SEC has strict requirements for the securities classification of tokenized assets, which may require registration or seeking exemptions, and a balance must be struck between compliance, security, and robustness. In Europe, data privacy laws such as GDPR may also affect the processing of investor data during the tokenization process, increasing compliance costs. Regulatory differences in different jurisdictions may result in different classifications of the same asset in different regions, which poses challenges to 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 considered securities, and real estate projects are considered securities or physical assets depending on whether they receive returns. The specific classification needs to be combined with the regulatory environment.

Participation in RWA Compliance Restrictions

Since the regulatory intensity and compliance of the Web3 industry vary in various countries, mainland investors who participate in it need to comply with domestic and international laws and regulations, including but not limited to those related to funds and taxes.

So, what are the key points that mainland Chinese investors should pay attention to when investing in overseas RWA assets?

1. Foreign exchange controls

RWA is an asset that tokenizes real-world physical assets or traditional financial assets through blockchain technology. It can be purchased directly on the blockchain where the asset is issued, or through blockchain exchanges or stock exchanges that support RWA asset transactions.

To purchase overseas RWA assets, you first need foreign exchange (such as US dollars, Hong Kong dollars, etc.) and stablecoins (USDT, USDC, etc.) to make the purchase. If you currently hold RMB assets and need to exchange currency and purchase stablecoins, you may need to pay attention to whether it complies with the "Foreign Exchange Management Regulations" and other relevant laws and regulations.

• Restrictions on personal foreign exchange management

According to the "Personal Foreign Exchange Management Measures" (State Administration of Foreign Exchange Order No. 3 [2007]) and its implementation rules, domestic individuals are entitled to a convenient foreign exchange purchase quota equivalent to US$50,000 per year, which can be used for current account expenditures such as tourism and studying abroad, but cannot be used for overseas securities investment (such as US stocks, RWA, etc.). In addition, domestic individuals are not allowed to use their own foreign exchange or purchase foreign exchange for overseas securities investment without approval, unless through compliant channels such as QDII (Qualified Domestic Institutional Investors).

• Provisions on Foreign Exchange Administration of Overseas Direct Investment (ODI) by Enterprises

According to the Regulations on Foreign Exchange Administration of Overseas Direct Investment (Huifa [2009] No. 30) and the Regulations on Foreign Exchange Administration, domestic companies that make overseas securities investments must first register with the State Administration of Foreign Exchange for overseas direct investment (ODI) and submit proof of source of funds, investment plan and other materials. Unauthorized remittance of funds without registration may constitute capital flight or illegal cross-border capital flow. ODI is usually applicable to real investment (such as setting up overseas enterprises, mergers and acquisitions, etc.). If it is directly used for securities investment, it must comply with the QDII or cross-border securities investment pilot policy, otherwise it may be deemed as a violation.

• Risks of cross-border securities and exchange business

According to the Securities Brokerage Business Management Measures issued by the China Securities Regulatory Commission in 2023: Unlicensed business is prohibited: Foreign brokerage firms that are not licensed in China are not allowed to directly solicit business or provide trading services to domestic investors. Although existing investors can continue to trade, the remittance of new funds must comply with foreign exchange management regulations, otherwise it may be deemed as illegal capital outflow.

Domestic investors who trade through blockchain exchanges or stock exchanges may be considered to be involved in illegal cross-border securities activities.

• Cryptocurrency transactions are not protected

According to the Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation, buying digital currency is a high-risk behavior because it is characterized as an illegal currency and is not protected by law. The current regulatory policy explicitly prohibits financial institutions from participating in stablecoin-related businesses and cleans up 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 policy tightening. Unlike Hong Kong and other regions that allow compliant stablecoins, the mainland strictly restricts such transactions. Investors need to bear potential losses on their own and should pay close attention to regulatory developments to avoid crossing legal red lines.

• Compliance with foreign funds

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

2. Tax policy

After Chinese residents purchase overseas RWA assets, hold them and sell them, how should the income generated during the period be taxed according to the tax policies of each country?

In this article, we take the purchase of US RWA assets as an example. However, since the regulation and taxation of tokenized assets are still developing in the United States, the SEC recently discussed the regulatory path for RWA tokenization, but did not clarify the tax details and only discussed it under the existing regulatory framework.

Analysis of US tax burden

According to the US-China tax treaty, the US tax burden on RWA assets invested by non-resident investors from China is mainly withholding tax, including:

• If it is tokenized real estate (such as real estate): According to Articles 6 and 12 of the treaty, the income is subject to tax in the United States. According to FIRPTA (Foreign Investment in Real Property Act), a tax rate of 20% or lower may apply.

• In the case of tokenized stocks or bonds: dividends are subject to a 10% withholding tax under Section 9; interest is subject to a 10% withholding tax under Section 10; capital gains are generally tax-free for non-residents unless they involve U.S. real estate.

Analysis of China's tax burden

Although China has not yet clearly defined the classification of RWA assets, its income can be referred to as investment income. According to the current tax law, a 20% capital gains tax is imposed on overseas investment income, and tax audits are particularly strict for high net worth individuals.

• If RWA is treated as a digital asset or with reference to other traditional assets, the proceeds from the sale may be subject to a 20% capital gains tax, and foreign taxes already paid can be declared exempt.

• If the dividend income from RWA assets is separate income, personal income tax should be paid according to the dividend tax. If the 10% withholding tax has been paid in the United States, a credit can be applied for. If the dividend income from RWA assets is included in the price of RWA assets, it should be included in the investment income and capital gains tax should be paid.

According to the CRS (Common Reporting Standard) international tax information automatic exchange standard, an individual's income information in multiple countries may be exchanged through CRS, aiming to combat tax evasion and tax avoidance through cross-border cooperation. According to Chinese law, investors have the obligation to actively declare taxes and pay taxes legally and in compliance with regulations.

Future Trends

The future trend of RWA tokenization is an important topic in the current financial technology field. Especially for investors in mainland China, trend analysis is particularly critical when combined with global dynamics and the local regulatory environment.

According to the latest research, the RWA tokenization market has exceeded $50 billion in 2025, a 67% increase from 2024, with real estate and bonds being the main drivers. By 2030, the RWA tokenization market size may reach $30 trillion, and data from 2025 shows that this goal is being achieved at an accelerated pace. The drivers of growth mainly include blockchain adoption by traditional financial institutions and the gradual clarification of the regulatory environment.

The global regulatory framework is gradually improving, and special regulations have been introduced in the UAE, Europe, and Asia to provide legal support for RWA tokenization. For example, regulatory coordination is seen as a key factor in driving market growth. In the United States in particular, institutional participation is another major driving force for the development of RWA tokenization. For example, in 2025, BlackRock sought regulatory approval to tokenize bonds and stocks, and JPMorgan has launched an internal tokenization platform, showing institutional confidence in RWA.

However, the regulatory environment in mainland China is still in a "gray area" and lacks specific policies for RWA. According to PANews' analysis, most mainland projects use private chains or alliance chains, and trading platforms are often limited to cultural or digital exchanges.

Summarize

For investors in mainland China, RWA tokenization is both attractive and comes with unique challenges. Since the domestic regulation of the Web3 industry and digital assets is still in a "gray area" and lacks 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 abide by domestic and foreign 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 ignored. It opens up new possibilities for investors and developers by improving liquidity, enhancing accessibility, improving transparency, and unlocking the composability of the DeFi ecosystem. In the future, as the global regulatory framework gradually improves and technological innovation continues 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 foreign laws and regulations, and ensure the safety and compliance of funds. Only with the dual protection 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.