At the beginning of 2025, two "explosive" news items have already been released in the Hong Kong region. First, Huaxia Bank announced the launch of the first retail tokenized fund in the Asia-Pacific region in Hong Kong (for more details, you can check out Crypto Salad's article "The First Retail Tokenized Fund in the Asia-Pacific Region Lands in Hong Kong! Web3 Lawyers Explain the On-Chain Innovation of Fund Tokenization and the Future of RWA"). Second, the Hong Kong Financial Secretary declared that the second "Hong Kong Virtual Asset Development Policy Declaration" will soon be released, further innovating how traditional assets can better integrate with virtual assets.

These two positive news items are seen by many as a representation of the compliance of RWA projects. At the same time, combined with the news that the first RWA project in the agricultural sector of mainland China—"Malou Grapes"—was successfully launched and raised 10 million at the Shanghai Digital Asset Exchange, RWA tokenization seems to have completed its transformation from "concept" to "implementation." Therefore, whether on the asset side, intermediary service side, or primary investors, there has been a flurry of related activities recently, with numerous discussions and project inquiries almost every day.

During this time, Crypto Salad has received a large number of landing demands from project parties, covering a wide range of underlying assets, including bonds, gold, rare metals, non-performing assets, agricultural products, property rents, bulk commodities, digital copyrights, fan economy, and more…

As the validation of various projects deepens, every project party ultimately returns to the starting point, constantly asking themselves:

• Is my project suitable for RWA?

• If my project is not suitable for RWA, then what kind of project is suitable?

• What are the requirements for underlying assets in RWA? Can all types of real assets be used?

• What kind of token am I issuing? Is it a worthless token?

• If it is not a worthless token, do people in the crypto space have the motivation to speculate on assets and rights that are physically anchored (with relatively fixed value)?

  ……

Today, Crypto Salad will attempt to analyze these questions based on our practical experience.

Let’s start with a conclusion:

The RWA path exploration that can generate the greatest value and is most suitable for us must be the combination of mainland assets + data compliance for outbound transactions + raising overseas funds, achieving controllable assets, trustworthy data, and fund-raising capabilities.

### 1. How to Understand RWA?

First, we need to clarify the definition of RWA. RWA stands for Real-World Assets Tokenization, which means packaging and storing the intrinsic value, operation, revenue, and other data of various assets in the real world on the blockchain, forming digital tokens (i.e., digital tokens), and then issuing them for financing and trading on-chain with investors.

Many enterprises are attracted to the "delicacy" of RWA financing, so let’s first discuss what characteristics RWA has in financing.

Since the process of RWA "tokenization" is similar to the process of asset "securitization," and also includes the ICO (Initial Coin Offering) process, which is similar to the IPO (Initial Public Offering) process, we can compare them.

1. Focused on Underlying Assets

The biggest difference between the two is that RWA focuses on underlying assets, rather than being based on non-existent air; we can call this type of token an Asset-Backed Token (ABT).

Since it focuses on underlying assets, it means that its financing behavior does not revolve around the credit of the entity but relies on the assessment of the value of the underlying assets. Therefore, whether a company is profitable in the long term is not the most critical factor for RWA. As long as a certain batch of assets owned by the company has value and potential, that batch of assets can be packaged and put on-chain for financing. This undoubtedly brings more imagination and possibilities to enterprises.

What types of assets are suitable for RWA?

From the effect of asset tokenization, RWA projects are tailor-made for high-value, high-quality projects that need to improve liquidity and lower investment thresholds. Some project types that are relatively easy to accept and understand include:

• Stablecoins: Issued with fiat currency or cash equivalents as support, such as the earliest digital dollars USDT and USDC, which can be considered the most successful RWA projects on the market.

• Bonds and Stocks: Tokenizing traditional financial assets like bonds and stocks to improve liquidity and market access, such as USYC backed by U.S. Treasury bonds.

• Real Estate: Lowering the investment threshold for real estate through tokenization, such as RealT.

• Bulk Commodities: Such as carbon credit certificates, precious metals, and other physical assets, for example, PAXG, which is anchored to gold.

2. Financing Speed

RWA leverages blockchain technologies such as smart contracts to digitize the entire financing process on-chain, resulting in structured and standardized data, making data a standardized product. From asset evaluation, token issuance to fund raising, combined with the public transparency and on-chain traceability of blockchain, the speed of financing can indeed be greatly enhanced.

3. Asset Liquidity

RWA tokenizes, fragments, and internationalizes these real-world assets through blockchain technology. For example, a house worth 50 million may be unaffordable for most people, but if the house is divided into one million fragments, everyone can afford it. It’s like putting "wheels" on the assets of enterprises, allowing them to flow quickly in the market. Better liquidity also brings the possibility of quick exits for every investor, making them more willing to invest.

Although a token can represent a fraction of a house, whether it’s one hundred thousandth or one billionth, this difference will be influenced by the emotional fluctuations of the secondary market, but there exists a relatively stable benchmark, which is the house itself, i.e., the value of the underlying asset.

### 2. Challenges Faced by Enterprises in RWA

Since the benefits of RWA are so enticing, why are there still only a handful of examples of mainland enterprises successfully implementing RWA? Crypto Salad has summarized the two main challenges that enterprises commonly face from practice:

1. Compliance Challenges

RWA tokenization naturally involves "tokens," but mainland China explicitly prohibits virtual currency financing trading platforms from exchanging, buying, or selling virtual currencies or providing pricing services. This is why compliance has a very high priority in RWA projects.

Article 3 of the "Notice on Further Preventing and Dealing with Risks of Virtual Currency Trading Speculation":

Activities related to virtual currency are considered illegal financial activities. Engaging in the exchange of legal currency for virtual currency, exchanges between virtual currencies, buying and selling virtual currencies as a central counterparty, providing information intermediary and pricing services for virtual currency trading, token issuance financing, and trading of virtual currency derivatives, among other activities, are strictly prohibited and will be resolutely banned according to law. Those who engage in related illegal financial activities that constitute a crime will be held criminally liable according to law.

Therefore, mainland enterprises must plan a complete compliance path to achieve RWA.

Tokens cannot be issued within China; the underlying assets can be either domestic or overseas. The entire project can operate in a cross-border manner or solely overseas to meet the compliance requirements for token issuance.

For cross-border projects, the first step that cannot be avoided is asset financialization.

Since RWA projects must interact with the regulations of various jurisdictions, if enterprises do not link their products with standard products (stocks, bonds, shares), it will affect their legal rights. In a global environment where digital regulation is not yet perfect, the legality of RWA relies on its adaptation to traditional legal frameworks. If there is no linkage to standard products, it will not be possible to leverage existing legal infrastructure to reduce regulatory friction and ensure the effectiveness of legal rights. Therefore, only after asset financialization can enterprise assets be tokenized through smart contracts.

2. How to Attract Investor Interest?

After the token is issued, how can it generate value and make people willing to pay for it is a real pain point and one of the most common questions enterprises consult Crypto Salad about.

To deeply understand this issue, let’s first look at some knowledge about digital currencies.

First, can you explain the differences between mainstream coins (like BTC), altcoins, worthless tokens, meme coins, and other digital currencies that we are familiar with in the market?

These coins have subtle differences in nature, but the main difference lies in the underlying mechanisms:

Mainstream coins, such as BTC, have a PoW (Proof of Work) mechanism that competes for computing power, while ETH has transitioned to a PoS (Proof of Stake) mechanism, reducing issuance costs through staking tokens. Entering the Web3 era, the technical barriers and costs of issuing tokens have further decreased, leading to the emergence of standardized protocols, such as Ethereum's ERC-20, which allows token issuance to be quickly completed through code templates. In the past year of 2024, it was a typical era where worthless tokens were rampant, with a large number of tokens deployed on Solana and Base chains.

It is evident that issuing tokens in the Web3 world is not difficult.

So, if issuing tokens is not difficult, is listing on exchanges difficult?

Crypto Salad tells you that it is actually not difficult; at least achieving on-chain circulation is not hard. If enterprises want to complete the listing on exchanges (referred to as "listing"), it is best to get listed on a mainstream exchange, which can be a bit challenging. However, from our experience, a token with sufficient influence is likely to be actively listed by mainstream exchanges, while a relatively less influential token can also complete the listing on mainstream exchanges if it passes the listing compliance review.

However, since the issuance of licenses for compliant virtual asset exchanges in Hong Kong, enterprises have focused on these licensed compliant exchanges, and how to seize the opportunity to list tokens on compliant exchanges has become the most concerning issue for enterprises.

At this point, it is necessary to clearly define a concept: What exactly do we mean by compliant exchanges?

Crypto Salad believes that compliant exchanges are those that have obtained virtual asset trading licenses under the regulations of their registered locations. There is also a potential category of "compliant exchanges," which are those where the regulatory policies for virtual assets remain neutral and do not crack down on virtual asset-related businesses, understood from the perspective of "what is not prohibited by law is allowed," and cannot be classified as illegal exchanges. Of course, with the push from governments around the world, led by the United States, the global regulatory framework for crypto is becoming clearer, and the definition of "compliance" will become increasingly precise in the future.

Having addressed the technical issues of issuing tokens and the challenges of listing on compliant exchanges, the tokens in RWA projects have finally arrived at the secondary market, ready for circulation. At this point, we return to the initial question of this section: Who will invest in such tokens?

Investors willing to purchase RWA tokens need to meet two prerequisites: motivation to purchase + being a (foreign) qualified investor.

In the Web3 world, the value of a token is determined by its working principles, such as the method of token generation, token economics, and circulation volume, among other factors. Most buyers entering the Web3 market are looking for "1000x coins" or "100x coins." A recent example is the Trump coin, which saw a maximum increase of 800% in just a few months. Ultimately, it is just a worthless token, lacking fundamentals and difficult to value, driven solely by the emotional fervor of players.

In comparison, in RWA, tokens are anchored to assets. The value of the assets is relatively stable and cannot skyrocket by a hundred or a thousand times. If someone is willing to pay for RWA tokens, it is likely because they recognize the inherent high value of the tokens. Achieving this can only rely on the underlying assets themselves. At this point, we find that when tokens are linked to assets, it somewhat contradicts the popular token dynamics in the current Web3 world. The appreciation potential of RWA tokens themselves is limited; investors will only enter the market if they are interested in the assets themselves.

Secondly, under the premise of compliance in secondary circulation, exchanges generally have entry requirements for investors, aiming to protect investors. For example, the tokenized fund released by Huaxia Bank is only available for purchase by investors in the Hong Kong region.

Being interested while needing to meet the conditions of (overseas) qualified investors significantly reduces the pool of potential investors.

### How Should RWA Projects Be Implemented? What Preparations Should Enterprises Make? What Can Crypto Salad Do for You?

1. Initial Screening of Feasible RWA Projects

In practice, we find that many enterprises are only interested in RWA projects, believing they have assets that can achieve RWA, but they cannot articulate what the planning for the underlying assets is, and they may not even have a good understanding of their own asset situation.

Using a somewhat inappropriate analogy, it’s like a child wanting to study abroad; before parents look for an agency, they should first fully understand their child's situation, determine a preliminary study destination and budget, and then match it with the agency's resources to discuss the probability of success.

Therefore, enterprises should first comprehensively understand their asset situation, finalize the underlying assets, and ensure that the underlying assets are linked to the enterprise's operations. This places higher demands on the professionals within the enterprise. Enterprises must have cross-disciplinary talents who understand business operations, the highlights of the enterprise and its assets, and the dynamics of Web3. Before launching a project, enterprises must recognize that RWA is a comprehensive project that spans across industries, finance, and digital realms, and "well-rounded" talent is essential.

2. Prioritize Technology and Compliance, Address Dual Risks Upfront

Once the initial screening is complete, the Crypto Salad team will work closely with enterprise leaders to deeply study the RWA plan. This includes designing the token economic model, developing the technical architecture for token issuance, methods for data collection, cost and timeline assessments during the process, and compliance pathways, among others. Due to the differences in enterprise nature and assets, compliance requirements for commodity operations and circulation vary across regions and countries, as well as legal regulations. We help enterprises prioritize technology and compliance, addressing dual risks upfront.

3. Project Execution and Completion of Primary Market Fundraising

After the plan is completed, the project moves into the execution phase. The core goal of the Crypto Salad team at this stage is to assist enterprises in executing the project. This specifically includes in-depth due diligence, writing white papers, developing and deploying smart contracts, and preparing a full set of legal documents, as well as connecting with resource providers throughout the RWA project process. Ultimately, the project party will achieve asset tokenization.

4. Exchange Listing Planning, Secondary Market Circulation, and Subsequent Operational Management

At this stage, we need to make subtle adjustments based on the policies at the time, the needs of the enterprise, and changes in investors to help the enterprise complete secondary market circulation. Our overseas partners are quite familiar with various licensed exchanges and mainstream exchanges. Additionally, as a Web3 legal team with long-term experience in providing investment and financing services to Chinese enterprises, we will customize investment and financing legal documents for enterprises, keep them updated on regulatory policy changes, and provide dynamic compliance adjustment plans.

5. Community Engagement and Promotion, Serving as Ongoing Comprehensive Consulting Advisors for Enterprises

Generally, at this stage, enterprises need support in designing and executing community operation plans, including establishing brand communities, configuring community management tools, and localizing multilingual content; they need to connect with media and KOL resources and adjust communication strategies accordingly. Enterprises need to monitor and optimize operational processes, such as regularly reporting on asset on-chain rates, utilizing token release and destruction mechanisms, and implementing market capitalization management strategies.

### About Us

1. What Kind of Team is Crypto Salad?

The Crypto Salad team is part of Beijing Yingke (Shanghai) Law Firm, co-founded by Senior Partner Lawyer Sha Jun and several outstanding lawyers from different fields.

The Crypto Salad team has rich practical experience in blockchain technology compliance, digital asset legal regulation, cross-border investment and financing structure building, and legal consulting in emerging technology fields, having provided professional legal services to over 300 Web3, AI, and financial enterprises and more than 500 practitioners.

Yingke Law Firm was established in 2002 and is headquartered in Beijing. It has 123 branches in mainland China and one joint law firm in the Guangdong-Hong Kong-Macao Greater Bay Area. Yingke's global legal service network covers 196 cities in 103 countries and regions, having provided satisfactory legal services to 1.5 million domestic and foreign enterprises.

Therefore, the Crypto Salad team is one of the few professional Web3 teams in the market with complete experience in RWA cases, capable of accurately grasping enterprise pain points and needs, and providing one-stop, full-spectrum, and full-link services.

2. Our Team Composition

• Legal Compliance Experts: Ensure that the asset tokenization process is legal and compliant, review the legal validity of smart contracts, and establish a framework for investor rights protection to mitigate regulatory risks.

• Operators and Strategic Advisors: Develop market strategies and capital operation plans, optimize asset liquidity and manage risks, and promote efficient project implementation.

• Blockchain Technology Experts: Responsible for building and maintaining blockchain infrastructure, from underlying architecture design to smart contract development, ensuring accurate mapping of on-chain data and off-chain assets.

• Financial Experts: Provide asset valuation, financing strategies, and risk management analysis, design structured financial solutions, and enhance asset liquidity and investment returns.

3. What Complete RWA Case Experience Do We Have?

• A Project for a Hong Kong Bond Company

  Provided a complete bond tokenization design for a bond company in Hong Kong, helping the client achieve seamless integration between the traditional bond market and blockchain technology.

  By tokenizing bonds, the client was able to enhance the transparency, liquidity, and efficiency of transactions. We also designed the issuance and trading system for the bonds, ensuring compliance, market operation, and efficient settlement.

• A Project for a South Korean Fashion Platform

  Designed an NFT-RWA trading system for a South Korean fashion platform, focusing on integrating the trading of fashion products and the certification and traceability of collectibles into blockchain technology.

  This solution provided verifiable proof of product ownership and digital asset support for the fashion platform, allowing consumers to purchase and trade fashion brand products with confidence while enhancing market transparency and user trust.

• A Project for a Malaysian Refinery Company

  Designed an RWA solution for a Malaysian oil company, combining the concept of futures with the oil processing process to promote virtual assets.

  This solution enabled the company to convert futures contracts for oil products into tradable assets through tokenization, while automating the management of asset trading, price adjustments, and risk control through smart contracts, thereby improving asset liquidity and enhancing market transparency.

Special Statement: This original article only represents the personal views of the author and does not constitute legal consultation or legal advice on specific matters. For reprints, please feel free to contact Crypto Salad.

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