Exploration of RWA Assets and Compliance Points for Domestic Investors

RWA(Real-World Assets) is the process of converting real-world physical or traditional financial assets into digital tokens through blockchain technology. This tokenization enhances the liquidity, transparency, and accessibility of assets, opening up new investment opportunities for investors. The RWA market is developing rapidly, with a projected global scale exceeding $50 billion by 2025, and long-term potential reaching as high as $18.9 trillion.

The United States, with its mature financial market and clear regulatory framework, has become an important market for the development of RWA. The European Union, Singapore, Hong Kong, and other regions are also actively promoting the development of RWA. However, for investors in mainland China, participating in RWA investments presents both opportunities and challenges. Due to the differences in regulatory environments, investors need to comply with both domestic and international laws and regulations.

The tokenization of RWA assets brings several advantages:

1. Increase liquidity: Transform traditional low-liquidity assets into tradable tokens, expanding the potential buyer base.

2. Enhance Accessibility: Lower the investment threshold to allow small investors to participate in high-value asset investments.

3. Enhance Transparency: Use blockchain technology to provide traceable and auditable information, reducing the risk of fraud.

4. Release composability: Combine with the DeFi ecosystem to create new financial products and services.

The classification of RWA asset attributes is mainly based on the underlying asset types and the legal structure of tokenization. Common RWA assets include:

• Securities: such as tokenized stocks, bonds, etc.
• Physical assets: such as tokenized real estate, commodities, etc.
• Intangible assets: such as intellectual property, copyrights, etc.

In the United States, the SEC may use the Howey Test to determine whether tokenized assets constitute securities. Most RWA assets that offer profit returns tend to be viewed as securities.

For investors from mainland China participating in overseas RWA investments, the main compliance restrictions to be aware of are as follows:

1. Foreign exchange control:

   • The personal annual foreign exchange facilitation quota of $50,000 shall not be used for overseas securities investment.
   • Enterprises must register for ODI and are not allowed to remit funds without authorization.
   • Trading through unlicensed offshore brokers or exchanges may be regarded as illegal cross-border securities activities.
   • Virtual currency transactions are not protected by law.

2. Tax Policy:

   • The United States imposes withholding tax on non-resident investors
   • China may impose a 20% capital gains tax.
   • Attention should be paid to the exchange of cross-border tax information under CRS.

In terms of future trends, the global RWA market continues to grow, and the regulatory framework is gradually improving. However, the regulatory environment in mainland China is still in a "gray area." Investors need to carefully assess risks, strictly comply with domestic and foreign regulations, and participate in RWA investments through compliance channels. While pursuing returns, it is essential to ensure the safety of funds and compliance.