Decoding the RWA with Chinese characteristics: practice characteristics, risk analysis and optimization path

The triangular game of opportunity, risk and regulation

Author: Shao Jiayi, Liu Honglin , Mankiw Blockchain Legal Services

If you were still lamenting last year that RWA was just a high-end game played by overseas financial institutions, this year you may have heard the word "RWA" in cultural exchanges, farms, and even liquor factories.

RWA projects in mainland China have long stopped chasing traditional U.S. Treasury bonds or commercial real estate, and have taken a different approach, taking the "local life" route. Think about it: Malu grapes, airport VIP lounges, liquor delivery rights... They no longer sound cold, but rather carry a bit of explorer romance and down-to-earth practicality.

Next, let’s talk about how this group of “light and beautiful” mainland RWAs are performing this new dance between blockchain and the real economy, and what invisible risks are hidden?

The current situation and innovative practices of RWA in mainland China

1. Asset type: A “lightweight” attempt to integrate consumer rights and industry

In the mainland, RWA is no longer confined to traditional financial assets with high-frequency transactions, but targets consumer scenarios that are closer to life. You may see that the airport VIP lounge service is made into a token. What users have in their hands is no longer an abstract digital currency, but actual rights and interests that can be exchanged for a cup of coffee or a waiting seat. For example, the Malu Grape RWA project is actually quite interesting - it makes the grape delivery rights into a token. Investors do not buy bonds or equity, but the expectation of "whether farmers can grow good grapes this year." This model not only closely combines traditional agriculture and blockchain technology, but also exposes a problem: if the weather is bad and the output declines that year, how is the value behind the token calculated? This gives people a feeling that "there is inevitably a gray area behind innovation."

2. Technical Path: Exploring Alliance Chain in a Semi-Closed Ecosystem

Most of the RWA projects in the mainland choose to use private chains or alliance chains, and the trading platforms are often limited to cultural exchanges or digital exchanges. This has an advantage: the data is in their own hands, and it is easier for regulatory authorities to intervene; but on the other hand, the free interconnection and liquidity of the global public chain are lost. Take "Jiuyu Lingjing" as an example. It relies on the alliance chain of Boundary Intelligence to issue a "wine certificate", and transactions are strictly limited to specific platforms. This is like a fine tavern. Although the taste is good, it is difficult to compete with international brands of star-rated hotels.

3. Compliance framework: regulatory “gray area” and technology arbitrage

At present, the mainland has not issued specific regulations or regulatory policies for RWA. Many projects can only use the beautiful banner of "equity certificates" to try to avoid the risk of being identified as securities. However, everyone knows that "regulators are not fools". Even if you say "no promise of returns" on the surface, as long as users think "it will rise", they may be on the verge of "skirting the edge" or even "disguised deposit absorption". Many project parties have also confidently said "this is not a security, users can only operate on the platform, and there is no way to trade", but the reality is that users will always secretly find someone to hedge risks outside the market. In this way, the clues obtained by the regulatory authorities will never be easily let go.

A complete analysis of the compliance risks of RWA in mainland China

The RWA project in the Mainland is like a dish of hot stir-fry. It tastes good but it is easy to go wrong if the heat is not well controlled.

1. Asset title confirmation: the hidden concerns in the “grey area”

Take the RWA of artworks for example. Some project owners will use a "digital authentication certificate" to flaunt their ownership certificate, but the problem is: if the data behind the certificate is forged or the authentication is wrong, the blockchain cannot be rolled back. It's like you go to the supermarket and buy a bottle of "real fake" Coke. No matter how beautiful the label is, it can't cover up the poor quality of the actual taste.

2. Securities attributes: Is it really safe to play “edge ball”?

The operation method of many projects is: "We are just equity certificates, not securities!" But as long as you give users the expectation of "will rise", even if you clearly say that trading is not allowed, users will entertain themselves outside the market. What do the regulatory authorities think? They directly use "disguised deposit absorption" to set it up. As I often say, superficial avoidance does not mean there is no risk, and the regulatory eyes are sharp!

3. Cross-border data and privacy protection: a practical problem of "double attack"

Some RWA projects involve overseas investors, and cross-border transmission of personal information and transaction records must be strictly implemented in accordance with the Personal Information Protection Law. However, in reality, many projects lack compliant data channels, and even many alliance chains have caused user data to leak due to improper node permissions. Imagine that when you think your data is stored safely, there is a hidden danger of privacy leakage behind it. This is really a double blow.

Comparison with mature overseas projects: innovation and gap coexist

1. Asset selection logic: financialization depth and innovation coexist

Overseas RWA projects are mostly based on "hard assets", such as government bonds, real estate, supply chain receivables, etc., with clear value anchors and stable cash flows. For example, Ondo Finance in the United States achieves stable returns through government bond tokenization, and Hong Kong's charging pile RWA relies on physical equipment data to improve transparency. In contrast, mainland projects tend to be "soft assets" such as consumer rights and agricultural products, and the depth of financialization is insufficient, but their social value in microfinancing and inclusive finance (such as supporting farmers' financing) is worthy of recognition.

2. Technical standardization and data credibility

The Hong Kong Monetary Authority promotes the compliance development of digital assets through the Ensemble project sandbox, emphasizing data credibility and transparency, and the underlying data is mostly uploaded to the chain in real time through IoT devices. However, much data in the mainland still relies mainly on manual entry, which inevitably makes people worry about the risk of data tampering.

3. Market maturity and regulatory collaboration

Hong Kong has formed a three-in-one compliance framework of "regulatory sandbox-industry standards-judicial cooperation". For example, the charging pile RWA project jointly developed by Ant Financial and Longsun Technology achieved compliance docking between mainland assets and overseas funds through the Hong Kong SPV structure. However, mainland projects are restricted by foreign exchange controls and poor regulatory communication, and the market maturity still needs to be improved.

Optimization path: How to embark on a "compliant and self-disciplined" RWA path?

In order for the mainland’s RWA projects to truly develop sustainably, it is necessary to open up links in supervision, technology and market ecology.

1. Establish a “classified supervision” framework

For RWA projects that are just redemption services and similar to membership systems, such as airport VIP lounges or grape delivery rights, you can completely take the path of "consumer product supervision" - clearly state the scope of services and the boundaries of responsibilities. On the contrary, for RWAs with obvious income rights, you must refer to securities standards and go through the "securitization sandbox" to ensure that information disclosure, KYC and AML are all in place. In this way, you will not be afraid of supervision, and supervision will not find fault without reason.

2. Promote the integration of technical standards and judicial evidence

It is mandatory for physical asset chain projects to adopt the dual-channel verification of "IoT + blockchain", so that the data is first stored by judicial appraisal institutions before being put on the chain, ensuring that every piece of data is traceable. At the same time, it supports local courts to explore the rules for accepting "on-chain evidence" to lower the threshold for users to protect their rights.

3. Explore the compliance path of “domestic assets-offshore financing”

Drawing on the model of Hong Kong Langxin Technology, RWA tokens were issued through Hong Kong SPV, foreign capital was introduced through the regulatory sandbox, and the "RWA cross-border financing white list" was piloted in cooperation with the State Administration of Foreign Exchange to simplify the approval process for repatriation of funds. This can not only broaden financing channels, but also ensure process compliance, so as not to repeat the mistakes of P2P.

Attorney Mankiw's Summary

There is no unified answer to how the mainland RWA will proceed. Judging from the projects we have seen so far, "no finance, no securities, only services" is not a panacea. If you just "play dumb" for compliance, you will eventually be unable to escape the heavy fist of supervision; projects that really want to succeed must finally be clear about one thing: are you self-disciplined for long-term development, or are you gambling for short-term financing? Today it may be grapes and white wine, but if it becomes "RWA version of P2P" tomorrow, the entire industry will have to start all over again.

In summary, the mainland RWA project has unique advantages and practical value in the exploration of "light assets" and "localization", but there are still many shortcomings in asset confirmation, technical standards, regulatory collaboration, etc. Only through the triple breakthrough of "technical standardization + regulatory sandbox + cross-border collaboration" can it stand out in the fierce market competition and truly realize the ideal of empowering the real economy with blockchain.

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