Industry insiders in Hong Kong discuss RWA: regulation, opportunities, and challenges

Recently, three experts from well-known virtual asset institutions in Hong Kong conducted an in-depth discussion on the topic of RWA( Real World Asset ). They are Junfei, CEO of Pandora Fund, Wang Yi, Director of Southern Dongying Quantitative Investment Team, and Marco Lim, Managing Partner of Mai Capital.

Regulatory Direction of RWA

Experts believe that the attitude of Hong Kong regulators towards RWAs is changing. Currently, the regulatory tendency is to regulate RWAs and STOs according to the underlying assets, rather than treating them all as virtual assets. This means that if the underlying assets of RWAs are traditional financial products such as stocks, their regulatory approach may be closer to that of traditional financial markets.

Regarding whether RWA will be open to retail investors, experts say it depends on the nature of the underlying assets. If the underlying assets are already open to retail investors in traditional markets, then theoretically retail investors can also purchase them after tokenization. However, if they were originally only available to professional investors, the same restrictions will apply after tokenization.

The Appeal of RWA to Ordinary Users

Experts point out that the appeal of RWA to ordinary users mainly lies in:

1. May provide higher risk-free returns than traditional markets. For example, certain RWA projects tokenize U.S. Treasury bonds, and in addition to the returns from the bonds themselves, additional earnings can be obtained through staking.

2. Asset fragmentation reduces investment thresholds.

3. For users who already hold cryptocurrencies, they can directly invest in traditional assets using stablecoins, avoiding the friction costs of fiat currency exchange.

How Compliance Institutions Can Engage with RWA

Experts believe that licensed institutions face both advantages and challenges in the RWA field.

Advantages: It can manage risk-free assets, providing users with more diversified investment options.

Challenge: KYC still needs to be conducted in a traditional manner, making it difficult to access virtual currency funds of unclear origin.

Possible future directions include:

• Issue compliant stablecoins to bridge the gap between virtual currencies and RWA.
• As a bridge between traditional finance and Web3, helping Web3 projects invest in traditional assets.
• Provide users holding virtual currencies with a channel to invest in traditional assets

Overall, experts believe that the RWA market has a broad prospect, but a balance between compliance and innovation still needs to be sought. Licensed institutions should actively communicate with regulators to promote the improvement of relevant policies, while also collaborating with industry partners to jointly advance the development of the RWA ecosystem.