Analysis of RWA Concepts and Discussion of Compliance Paths

Recently, the RWA( Real World Assets ) project has sparked widespread discussion in the Web3 space. There are opinions that RWA will reconstruct the new financial ecology of Hong Kong, but there are still differences in the industry regarding what constitutes "Compliance" RWA. This article aims to clarify the concept of RWA and explore its compliance path.

1. Definition of RWA Concept

RWA is a broad concept that refers to financing projects that tokenize real assets through blockchain technology. True RWA projects should possess the following characteristics:

1. Based on real assets
2. Asset Tokenization on Chain
3. Digital assets have ownership value.
4. The issuance and circulation comply 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( Security Token Offering ): Financial assets on-chain

STOs are subject to securities regulations and must comply with the definitions and standards of securities in various countries. The U.S. SEC uses the Howey Test to determine whether something constitutes a security.

2. RWA Project "Compliance" Layers

RWA Compliance can be divided into four levels:

1. Sandbox Compliance: such as the Hong Kong Monetary Authority Ensemble Sandbox project
2. Hong Kong Administrative Regulation Compliance: Incorporation into the STO Framework Management
3. A clear regulatory framework for crypto-friendly regions
4. "General Compliance": Not identified as a violation, has certain compliance space

Currently, most RWA projects attempt the first three paths to achieve formal "Compliance" at a lower cost.

3. Compliance Recommendations for RWA Projects

1. Choose a policy-friendly jurisdiction
2. Ensure that the underlying assets are real and redeemable
3. Obtain investor recognition
4. Ensure compliance throughout the entire chain of operations
5. Preventing Post-Compliance Risks
6. Emphasize Brand Reputation Management

4. Conclusion

The RWA project types are diverse and need to be observed in categories. The biggest challenge lies in the uncertainty of the system. Industry standards should be formed through practice within the framework of the rule of law to promote institutional evolution. At the same time, compliance risks must be heeded, and the existing regulatory framework should be respected.