So which type of RWA are you referring to?

Written by: Liu Honglin

Recently, during a conversation with friends, the topic inevitably circled back to Web3. Someone asked me if I had been working on RWA lately. Upon hearing those three letters, I hesitated to respond immediately and asked, "Which type of RWA are you talking about?"

It's not that I want to create suspense; it's just that there are too many people in the industry discussing "RWA," but everyone has a different understanding of its meaning. You might say RWA refers to issuing tokens, while someone else might think it’s about creating concepts for PR, and others might say it’s about the presale or crowdfunding of digital goods. If you express your opinion without clarifying, the ensuing conversation can easily offend someone, and the friendship boat can capsize, leaving any potential legal fees completely out of reach.

Today, let's seriously discuss the RWA projects currently on the market as understood by lawyer Honglin, which can be mainly divided into three types. Each claims to represent "on-chain real assets," but the underlying logic, legal risks, and business purposes are entirely different.

First Type: Asset Tokenization + Financial Compliance, the "Regular Army" of DeFi

The core logic of this type of RWA can actually be summarized in one sentence: turning traditional financial assets into programmable on-chain tokens.

For example, short-term government bonds that you would originally need to open an account at a traditional financial institution and submit a pile of KYC documents to purchase can now be directly bought as tokenized T-Bill notes through on-chain platforms like Swarm, Ondo, Matrixdock, etc. These assets are backed by real government bonds, loans, notes, or fund shares, held by custodians, who issue RWA tokens via blockchain, allowing users to utilize them in DeFi protocols, such as for staking, lending, or yield aggregation.

This type of RWA is called the "Regular Army" because the operations behind it must meet at least the following three conditions:

1. The underlying assets must genuinely exist and be legally held by financial institutions off-chain;
2. The token issuance process must be compliant and transparent, typically needing to meet financial regulatory requirements from the U.S. SEC, Singapore MAS, EU MiCA, etc.;
3. The entry threshold for investors is relatively high, meaning not just anyone can buy in, often accompanied by whitelist systems or accredited investor restrictions.

The biggest challenge for this type of project is the high regulatory costs, complex operational processes, and stringent compliance qualifications required for the team. It’s not something you can just launch whenever you want. But the benefits are also clear: transparent fund usage, real assets, and controllable returns, making it suitable for conservative investors who want to participate in on-chain finance without taking excessive risks.

Currently, institutions like Circle, Franklin Templeton, and Securitize are all laying out plans in this direction. For those looking to move Web2 financial traffic onto the chain, this is the most certain RWA path.

Second Type: Capital Market's "Chain Reform 2.0," Where Storytelling is More Important than Product Development

Now, let’s talk about the second type, which also appears quite "real," but the underlying focus is not on "assets," but rather on "market capitalization management." This is a typical Hong Kong approach: listed companies use a series of "RWA press releases" to tell a story about blockchain empowering the real economy, attracting market speculation on their stock prices.

Many people have likely seen similar tactics: a Hong Kong company with a declining main business suddenly announces its entry into Web3, releasing a flurry of news about signing a digital asset strategic cooperation agreement with a certain platform, planning to "tokenize" its projects or assets on-chain, and intending to globalize through the RWA model. If you check the white paper, it’s filled with fanciful nonsense, and they’ve issued dozens of press releases, complete with beautiful photos, and media coverage is overwhelming.

Why do they do this? Because such operations typically do not serve the on-chain ecosystem but rather create hype for the capital market. By telling RWA stories to boost valuations, appease shareholders, and secure financing, the essence is "packaging traditional assets with blockchain to arbitrage through the capital market." Some companies don’t even issue tokens; they merely change the color of their website or launch a new page and start claiming to be a "benchmark enterprise for Web3 transformation."

Strictly speaking, these types of RWA projects do not genuinely put assets on-chain, nor do they design token holder rights. For the project parties, their task is more about aligning with the rhythm of capital operations to tell a "digitalized" future story rather than achieving actual digitization. For ordinary investors, these projects generally do not participate in on-chain circulation, lack tradable tokens, and the likely outcome is: you think you are investing in Web3, but in reality, you are buying a worthless stock.

Third Type: Mainland China’s "Token + Presale" Model, with the Highest Legal Risks

The last type to mention is particularly "enthusiastic" in the Greater Bay Area, especially around Shenzhen/Fujian. In Web3 startup groups, tech finance chat groups, and promotional meetings, you often hear narratives like:

"Our project is RWA, using tokens to anchor actual goods, such as red wine, white wine, green tea, property income rights, machinery rental rights… Users who buy tokens are essentially locking in future returns in advance."

It sounds a lot like a combination of NFT + RWA, but it’s more like an old story of "crowdfunding + presale" dressed in blockchain clothing. Common tactics for these projects include:

1. No compliant custody mechanism; the authenticity of the assets is based solely on verbal claims;
2. Tokens are directly connected to individual users, with no investment thresholds;
3. Promising high returns, often claiming "double your investment in six months" or "a tenfold increase upon token listing is not a dream";
4. Project documents are rough, mostly offline PPTs and PDFs, lacking on-chain data and code audits.

More critically, most of these projects essentially constitute illegal public fundraising or disguised capital raising. Even if the underlying assets genuinely exist, if the tokens are tradable, promise returns, and are sold to the general public, they violate the red line of illegal fundraising under mainland Chinese criminal law, not to mention that some project parties are simply using RWA to commit fraud.

From recent law enforcement trends, public security agencies, market regulatory bureaus, and financial regulatory authorities have begun closely monitoring projects that claim to be "blockchain," "digital goods," or "RWA innovation." So, even if you see someone in your social circle sharing these projects saying, "This is RWA + new productive forces," stepping into it could lead to illegal fundraising.

So which type of RWA are you referring to?

From today’s perspective, the concept of RWA has become completely "polysemous." Some are genuinely tokenizing financial assets, some are harvesting from the capital market, and others are merely playing a game of hot potato.

The most ironic part is that lawyer Honglin often encounters these three groups in the same settings, and they surprisingly manage to support each other and team up for roadshows. The result is that the RWA circle appears lively, but internally it is chaotic and fragmented in understanding.

All of this is thanks to the "RWA consultants" in the market. They help clients come up with token plans, navigate fundraising processes, connect with government resources, and organize exhibition attendance, covering everything. For these friends exploring financial innovation, as a lawyer who particularly hopes for positive and compliant industry development, lawyer Honglin has a few small suggestions. I hope everyone at least asks these four questions when working on RWA:

1. Are your assets real, custodial, and auditable?
2. Does your token design avoid securities attributes?
3. Are your sales targets qualified investors or the general public?
4. Do you have sufficient legal opinions and regulatory response plans?

If you cannot answer these four fundamental questions directly, I suggest you refrain from casually mentioning "RWA," let alone using it as a banner for financial innovation.

We need the concept of RWA and hope it can be implemented. But we need someone to walk this path clearly, legally, and sustainably, rather than stepping into regulatory minefields and dragging your clients down with you. The consulting fees may benefit the service providers, but the result could bury the client.

So, when the RWA expert around you talks about poetry and distant places, please ask them for clarification:

Which type of RWA are you referring to?

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