Comparison of RWA and IPO: A Guide to Corporate Financing Path Selection

In recent years, with the development of blockchain technology and the improvement of regulatory frameworks, the tokenization of real-world assets (RWA) has gradually become the focus of financial markets. Meanwhile, traditional initial public offerings (IPO) remain an important way for companies to raise funds. This article will compare the similarities and differences between RWA and IPO, analyze their respective advantages, and provide references for companies to choose their financing paths.

Overview of RWA and IPO

RWA refers to the conversion of traditional financial assets such as debt rights, real estate, and accounts receivable into digital assets that can circulate on the blockchain. This process can enhance asset liquidity, reduce transaction costs, and improve transparency. For example, a fund company can bundle the income rights from real estate projects and issue them as on-chain virtual currencies, lowering the participation threshold for global investors.

An IPO is a company's initial act of issuing shares to public investors and listing on a stock exchange. It is the most formal and mature method of financing in the capital market, requiring strict financial audits, legal compliance checks, and the preparation of documents such as a prospectus.

Main Differences Between RWA and IPO

1. Financing Target: RWA is aimed at global investors, while IPO primarily targets qualified investors in specific markets.
2. Financing scale: RWA is flexible and variable, while IPO is usually larger in scale.
3. Issuance speed: RWA is issued relatively quickly, while the IPO process is complex and time-consuming.
4. Regulatory requirements: RWA regulation is relatively lenient, while IPO regulation is strict.
5. Information Disclosure: RWA disclosure requirements are lower, while IPO requires comprehensive and detailed disclosure.
6. Secondary Market: RWA can be traded globally 24 hours a day, while IPOs are limited to exchange trading hours.
7. Investment Threshold: The RWA threshold is relatively low, while the IPO investment threshold is relatively high.
8. Liquidity: RWA has higher liquidity, while IPO liquidity is limited by trading rules.

Advantages and Characteristics of RWA and IPO

RWA advantages:

1. Low threshold and high efficiency: Flexible investment amount, suitable for a wide range of investors.
2. Liquidity Improvement: Achieve global trading and enhance asset liquidity.
3. High issuance efficiency: can be issued quickly after the technology matures.
4. On-chain transparency: Transaction records are traceable, enhancing the trust mechanism.

IPO advantages:

1. High financing limit: Successful listing can achieve large-scale financing.
2. Brand reputation enhancement: Improve corporate image through regulatory review.
3. Large capital operation space: Various financial instruments can be used to promote enterprise development.
4. Improved investor protection mechanisms: A regulated environment protects investors' rights.
5. A wide range of investors: covering institutions, retail investors, and various types of investors.

Regulatory Bias Differences - A Case Study of Hong Kong

Hong Kong shows a differentiated approach in RWA and IPO regulation:

IPO Regulation:

• Adhere to a strict framework of the Securities and Futures Ordinance.
• Jointly regulated by the Hong Kong Stock Exchange and the Securities and Futures Commission.
• Covers multiple aspects including sponsorship, due diligence, audit review, and information disclosure.
• Ensure that listed companies have stable financial performance and good governance structure.

RWA regulation:

• Adopt an "inclusive and prudent" experimental mindset.
• Gradually establish a regulatory sandbox and licensing system for virtual asset service providers.
• Attempt to regulate RWA-type tokens as qualified investment products.
• The product provider is responsible for the reliability of the management and operation of the tokenization arrangement.

Suitable Customer Groups for IPO and RWA

Suitable for IPO:

• Mature enterprises
• Large-scale companies
• Enterprises in need of large-scale financing
• Companies pursuing brand enhancement
• Enterprises hoping to achieve long-term development through the capital market

RWA is suitable for:

• Start-up or growth-stage enterprises
• Small and medium-sized enterprises
• Enterprises with specific assets that need to be revitalized
• Companies seeking quick financing
• Companies aiming to attract global investors

Conclusion

RWA and IPO are not mutually exclusive; rather, they complement and reshape the traditional financing system. RWA provides new financing channels for small and medium-sized enterprises, enhancing financial inclusion; IPO remains a key pathway for companies to mature and embrace global capital. Enterprises should reasonably choose or combine these two financing methods based on their own development stage, financing needs, and strategic layout. In the future, with the maturation of regulatory mechanisms and the improvement of market acceptance, RWA and IPO are expected to jointly build a more diverse, transparent, and efficient financing ecosystem.