Exploration of RWA attributes and compliance points for domestic investors

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 that are difficult for traditional finance to reach for investors. 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. As 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 requirements related to digital assets.

This article will focus on RWA asset investment, deeply analyze the compliance points for mainland investors to participate in it, and help 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 have been tokenized worldwide, of which real estate accounts for $30 billion. As more and more institutions adopt blockchain technology, these figures are expected to soar in 2025. In the long term, it is expected that the RWA market may reach 18.9 trillion US dollars by 2033, showing great development potential.

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

1. United States

In the United States, the RWA (real world asset) tokenization market is booming, and the market size is expected to reach 50 billion US dollars by the end of 2025, with US Treasury bonds as the main driving force. The US market benefits from a stable regulatory environment and institutional participation. The SEC has issued guidance documents on the registration of tokenized securities. For example, in a speech on May 8, 2025, 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 $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 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 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 center 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 issued 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 to further promote 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. 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 projects in the real estate and financial securities fields are expected to 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, the first RWA-focused conference in Asia, 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 solutions 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 "gray area" of supervision and lacks a clear legal and policy framework. In terms of blockchain and related derivative technologies and financial supervision, the main obstacles to the implementation of RWA in China are the issuance and circulation of homogeneous tokens.

According to the Notice on Preventing the 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 behavior (ICO), in which the financing entity raises funds from investors (including virtual currencies such as Bitcoin and Ethereum tokens) through the illegal sale 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 to be 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 activities, and overseas issuance cannot completely avoid the mainland's regulatory impact. Cross-border issuance needs to meet both mainland and overseas legal requirements, which increases the complexity of compliance.

Regulatory uncertainty leads to multiple compliance risks for project parties 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 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 practicality of assets can be enhanced, while creating conditions for the wider application of off-chain data in the decentralized finance (DeFi) ecosystem. Here are the core benefits of asset tokenization:

1. Improved liquidity

In traditional markets, financial events are often recorded in separate ledgers, resulting in market 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 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 to achieve fractional ownership. These tokens can be listed and traded on widely circulated exchanges, eliminating the need for high-cost transaction intermediaries and significantly expanding the potential buyer base, thereby improving 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 the risk of going over budget, and only the wealthiest investors can participate. However, a successful film may bring several times the return in a short period of time. Similar investment opportunities include the purchase and lease of collectible sports cars, distressed overseas assets, or multi-family properties.

Tokenization breaks these limitations through a model similar to crowdfunding. Investors can purchase tokens linked to assets, thereby participating in asset classes that were originally difficult to enter with lower capital. This approach not only lowers the investment threshold, but also provides a wider group of investors with the opportunity to share 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 of information is particularly prominent when evaluating foreign assets or when buyers cannot personally inspect assets. 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, which is particularly applicable to high-priced luxury goods such as wine and caviar, as well as fashion and art, thereby enhancing the security and credibility of investment.

4. Unleashing 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 field, but also provide retail investors with new ways to access high-end investment categories.

In the future, tokenization will bring more innovative opportunities for smart contract developers. By combining tokens pegged to different assets, new synthetic assets, indexes 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 properties

RWA digitizes and records real-world tangible or intangible assets (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 to RWA assets, but also brings legal and regulatory complexities.

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:Including 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, copyrights, etc., more reflect economic value rather than physical form.

After tokenization, the legal classification of assets may change, especially in terms of whether they are classified as securities for supervision.

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 regulatory agencies (such as the US SEC) and need to comply with relevant securities laws. Therefore, tokenized RWA assets need to adapt to existing securities laws in the US market and face regulatory challenges.

2. Analysis of specific assets

Because the laws and policies on RWA in various countries may vary, the most representative US regulations are used as the analysis object.

• Tokenized US Stocks

In the United States, tokenized US stocks are generally regarded as securities because they represent an investment in the ownership of a company, which is the same as the nature of 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 US Bonds are generally considered debt securities, because bonds themselves are a type of debt instrument, and their debt nature is retained after tokenization. The classification of tokenized assets is closely related to the underlying assets. US 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 broken up 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 investment contracts.

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. Asset attributes after tokenization

After tokenization, RWAs are generally regarded as financial assets because they can be traded and managed through digital platforms and have the characteristics of financial instruments. Because asset tokenization improves liquidity and allows more people to participate in high-value asset investments, it makes it more like a financial asset.

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

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

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

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

In the United States, the SEC may use the Howey Test to determine whether a tokenized asset constitutes an investment contract and is therefore classified as a security.This test is important in the financial and cryptocurrency sectors, especially when determining whether new tokenized assets are subject to securities regulation.

The four elements of the test are as follows:

• Investment of money:The investor must invest money, goods, services or other forms of value.

• Common enterprise:The investor's money is shared with others in an enterprise or project, usually involving a pool of funds or profit sharing.

• Expectation of profits:The investor reasonably expects to receive a financial return from the investment, such as capital appreciation or dividends.

• Efforts of others:The investor's profits are primarily dependent on the management, operations or efforts of the issuer or a third party, rather than the investor's own.

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

If the asset issuing the RWA promises dividends, or the investor is for the purpose of obtaining a return on the asset investment, then 3. Expecting to make a profit is met, and the RWA asset should be classified as a security. If the Token holder of the RWA asset is only used as a tool to prove the ownership of the asset, such as as a property registration to prove the ownership, and does not enjoy the right to the profit return of the asset, then the third point is not met and it should be classified as a physical asset.

Therefore, for most RWA assets with profit returns, they tend to be regarded as securities in the United States, and as a digital tool, they also retain the underlying asset attributes.

4. Complexity of the regulatory and legal environment

The classification of tokenized RWAs is significantly affected 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 exemption, 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 for global investors and issuers.

The classification of RWA asset attributes depends on the type of underlying assets and the legal structure of the 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.

Compliance restrictions for participating in RWA

Due to the different regulatory strengths and compliance of the Web3 industry in various countries, mainland investors need to comply with domestic and foreign laws and regulations, including but not limited to those related to funds and taxes, if they participate in it.

So, what are the key points for mainland Chinese investors to participate in overseas RWA asset investment?

1. Foreign exchange control

RWA is an asset that tokenizes physical or traditional financial assets in reality through blockchain technology. It can be purchased directly on the blockchain where the asset is issued, or through blockchain exchanges and 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 purchase. If you currently hold RMB assets and need to exchange and purchase stablecoins, you may need to pay attention to whether it complies with the relevant laws and regulations such as the "Foreign Exchange Administration Regulations".

• Personal foreign exchange management restrictions

According to the "Personal Foreign Exchange Management Measures" (State Administration of Foreign Exchange Order No. 3 [2007]) and its implementation rules, domestic individuals enjoy 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 may not use their own foreign exchange or purchase foreign exchange to invest in overseas securities without approval, unless through compliant channels such as QDII (Qualified Domestic Institutional Investors).

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

According to the Provisions on Foreign Exchange Administration of Overseas Direct Investment (Huifa [2009] No. 30) and the Regulations on Foreign Exchange Administration: Domestic companies making overseas securities investments must first register their overseas direct investment (ODI) with the State Administration of Foreign Exchange and submit materials such as proof of source of funds and investment plans. Remittance of funds without registration may constitute capital flight or illegal cross-border capital flow. ODI is usually applicable to real investment (such as the establishment of overseas enterprises, mergers and acquisitions, etc.). If it is used directly for securities investment, it must comply with the QDII or cross-border securities investment pilot policies, otherwise it may be deemed to be a violation.

• Risks of cross-border brokerage 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 brokerages 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 and stock exchanges may be regarded as participating in illegal cross-border securities activities.

• Virtual currency 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 touching legal red lines.

• Compliant 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 foreign companies and other entities have funds, they can use these funds to purchase RWA asset tokens, which are not subject to domestic foreign exchange control and investment restrictions.

2. Tax policy

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

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

US Tax Burden Analysis

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, its income is subject to tax in the United States. According to FIRPTA (Foreign Investment in Real Estate 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 according to Article 9; Interest is subject to a 10% withholding tax according to Article 10; Capital gains are generally tax-free for non-residents unless they involve US real estate.  

China Tax Burden Analysis

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

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

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

According to the CRS (Common Reporting Standard) international tax information automatic exchange standard, the income information of individuals in multiple countries may be exchanged through CRS, which aims 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 in combination with global dynamics and local regulatory environment.

According to the latest research, the RWA tokenization market has exceeded US$50 billion in 2025, an increase of 67% from 2024, with real estate and bonds as the main drivers. By 2030, the RWA tokenization market size may reach US$30 trillion, and the data in 2025 shows that this goal is being achieved at an accelerated pace. The driving forces of growth mainly include the adoption of blockchain 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 places such as 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 the confidence of institutions 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 consortium chains, and trading platforms are often limited to cultural or digital exchanges.

Summary

For mainland Chinese investors, RWA tokenization is both attractive and accompanied by unique challenges. Since 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 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 financial technology revolution through compliant channels.

While pursuing returns, investors must remain highly cautious, fully understand and abide by relevant domestic and foreign laws and regulations, and ensure the security and compliance of funds. Only under 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.