Decoding the unique characteristics of RWA in mainland China: practical features, risk analysis, and optimization path

Written by: Shao Jiadian, Liu Honglin

If you were lamenting last year that RWA was just a high-end game played by overseas financial institutions, then this year you have likely heard the three words "RWA" in places like the cultural exchange market, farms, and even liquor factories.

Mainland China's RWA projects are no longer chasing traditional US Treasury bonds or commercial real estate, but have taken a different path, opting for a "local living" approach. Think about it: Malu grapes, airport VIP lounges, liquor redemption rights... it sounds no longer cold, but rather infused with a bit of the romanticism of explorers and grounded practicality.

Next, let's talk about this group of "light and beautiful" domestic RWAs, and how they are dancing this new dance between blockchain and the real economy, as well as what unseen risks are hidden within.

The current situation and innovative practices of RWA in Mainland China

1. Asset Type: A "lightweight" attempt at the integration of consumer rights and industry.

In mainland China, RWA is no longer confined to traditional financial assets related to high-frequency trading, but instead targets consumer scenarios that are closer to everyday life. You might see airport VIP lounge services being tokenized, where users no longer hold abstract digital currencies, but rather actual rights that can be exchanged for a cup of coffee or a boarding spot. For example, the Malu grape RWA project is quite interesting—it turns grape picking rights into tokens, where investors buy not bonds or equity, but expectations of whether "the farmers can grow good grapes this year." This model tightly integrates traditional agriculture with blockchain technology, but also exposes a problem: if the weather is bad that year and yields decline, how is the value behind the tokens calculated? This gives a sense of "there are inevitably gray areas behind innovation."

2. Technical Path: Exploring Consortium Chains in a Semi-Closed Ecosystem

Most of the RWA projects in the mainland choose to use private chains or alliance chains, and the trading platform is often limited to the cultural exchange or data exchange. This has the advantage that the data is in your own hands, and it is easier for regulators to intervene; But on the other hand, it has lost the free interconnection and liquidity of the global public chain. Take the "Wine Realm Spiritual Realm" as an example, it relies on the alliance chain of boundary intelligence to issue "wine licenses", and transactions are strictly limited to specific platforms. It's like a sophisticated bistro that, although it tastes good, is difficult to compete with the international brands of star hotels.

3. Compliance Framework: The "Gray Areas" of Regulation and Technological Arbitrage

Currently, there are no specific laws or regulatory policies in mainland China regarding RWA, and many projects can only use the attractive banner of "equity certificates" in an attempt to evade being classified as securities. However, everyone knows that "regulators are not fools"; even if you claim on the surface that "there are no promised returns", as long as users are thinking that "it will go up", it may edge towards "crossing the line" or even "disguised deposit-taking". Many project parties have confidently stated, "We are not a security; users can only operate within the platform and cannot trade", but the reality is that users will always find someone off-platform to hedge risks, and as a result, the clues obtained by regulatory authorities will definitely not be easily overlooked.

Comprehensive Analysis of RWA Compliance Risks in Mainland China

Mainland RWA projects are like a hot stir-fry; they taste good, but if the heat is not controlled well, it can easily lead to problems.

1. Asset Confirmation - Concerns in the "Gray Area"

Taking RWA art pieces as an example, some project parties will use "digital authentication certificates" to proclaim their ownership proof, but the problem arises: if the data behind the certificate is falsified or misidentified, the blockchain cannot be rolled back. It's like buying a bottle of "genuine imitation" cola at the supermarket; no matter how beautifully the label is written, it cannot cover up the poor quality of the actual taste.

2. Securities Attributes - Can Playing 'Close to the Edge' Really Be Safe?

Many projects operate with the following approach: "We are just providing a certificate of rights, definitely not securities!" But as long as you give users the expectation that "it will rise," even if you clearly say that trading is not allowed, users will still entertain themselves in the over-the-counter market. How do regulatory authorities view this? They directly use "disguised deposit absorption" to tackle it. As I often say, surface avoidance does not mean there are no risks; the regulators' eyes are very sharp!

3. Cross-border data and privacy protection - the real dilemma of the "double whammy"

Some RWA projects involve foreign investors, and the cross-border transmission of personal information and transaction records must strictly comply with the Personal Information Protection Law. However, in reality, many projects lack compliant data channels, and there are even numerous consortium chains where improper node permissions lead to user data leaks. Imagine that while you think your data is securely stored, there are hidden risks of privacy breaches lurking behind; this is truly a double blow.

Comparing with mature overseas projects: Innovation coexists with gaps.

1. Asset selection logic: a coexistence of financialization depth and innovation

Overseas RWA projects are mostly based on "hard assets" such as government bonds, real estate, and supply chain receivables, with clear value anchoring and stable cash flow. For example, Ondo Finance in the United States achieves stable returns through the tokenization of government bonds, while the charging pile RWA in Hong Kong enhances transparency based on data from physical devices. In contrast, mainland projects tend to lean towards "soft assets" such as consumer rights and agricultural products, with insufficient depth of financialization, but their social value in micro-financing and inclusive finance (such as supporting farmers' financing) is commendable.

2. Standardization of Technology and Data Credibility

The Hong Kong Monetary Authority promotes the compliant development of digital assets through the Ensemble project sandbox, emphasizing data credibility and transparency, with underlying data often being recorded on-chain in real-time via IoT devices. In contrast, many data entries in mainland China still rely mainly on manual input, raising concerns about the risk of data tampering.

3. Market Maturity and Regulatory Collaboration

Hong Kong has formed a compliance framework that integrates "regulatory sandbox - industry standards - judicial cooperation". For example, the charging pile RWA project in collaboration between Ant Group and Longxin Technology achieves compliant integration of mainland assets and overseas funds through the Hong Kong SPV structure. However, mainland projects are constrained by foreign exchange controls and poor regulatory communication, and market maturity still needs to be improved.

Optimizing the Path: How to Walk a "Compliance and Self-discipline" Road for RWA?

To truly create a sustainable path for mainland RWA projects, it is essential to streamline connections in regulation, technology, and market ecology.

1. Establish a "Categorical Supervision" Framework

For RWA programs that are just redemption services, similar to membership, such as airport lounges or grape pick-up rights, it is entirely possible to go the "consumer goods regulation" route – clearly define the scope of services and the boundaries of liability. On the contrary, for RWAs with obvious income rights, it is necessary to refer to the securities standards and go through the "securitization sandbox" to ensure that information disclosure, KYC and AML are all in place. In this way, you are not afraid of regulation, and regulation will not find fault for no reason.

2. Promote the combination of technical standards and judicial evidence preservation

It is mandatory for on-chain projects of physical assets to adopt a "IoT + blockchain" dual-channel verification, allowing data to be notarized by judicial appraisal institutions before being put on the chain, ensuring that every piece of data is verifiable. At the same time, it supports local courts in exploring the rules for accepting "on-chain evidence," lowering the threshold for users to defend their rights.

3. Explore the Compliance Path for "Domestic Assets - Offshore Financing"

By drawing on the model of Hong Kong Longsys Technology, issue RWA tokens through a Hong Kong SPV, utilize the regulatory sandbox to attract foreign investment, and collaborate with the State Administration of Foreign Exchange to pilot the "RWA Cross-Border Financing White List," simplifying the approval process for capital repatriation. This approach can both broaden financing channels and ensure compliance with processes, avoiding the pitfalls of P2P.

Summary by Lawyer Mankun

There is still no unified answer on how to proceed with RWA in the mainland. From the projects currently observed, "not finance, not securities, only services" is not a panacea. If you pretend to be "ignorant" just for compliance, you will ultimately struggle to escape the heavy hand of regulation; projects that genuinely want to break free must clarify 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 tomorrow it becomes "RWA version P2P," the entire industry will have to start over.

In summary, mainland RWA projects have unique advantages and practical value in the exploration of "light assetization" and "localization", but there are still many shortcomings in asset confirmation, technical standards, regulatory cooperation, and other aspects. Only through a triple breakthrough of "technical standardization + regulatory sandbox + cross-border cooperation" can they stand out in fierce market competition and truly realize the ideal of empowering the real economy with blockchain.