Definition of RWA Concept and Compliance Analysis

Recently, the RWA(Real World Assets) project has attracted significant attention in the Web3 field. This article will explore the definition of RWA and compliance issues from a professional legal perspective.

1. Definition of RWA Concept

RWA refers to financing projects that tokenize real-world assets through blockchain technology. True RWA projects should possess the following characteristics:

1. Based on real assets
2. Asset Tokenization on Chain
3. Digital assets have ownership value.
4. The issuance and circulation of tokens comply with legal regulations and are subject to supervision.

RWA projects are mainly divided into two categories:

1. Narrow RWA: Physical assets on-chain
2. STO( Security Token Offering ): Financial assets on chain

STOs are subject to securities regulations, and different countries have different standards for recognizing security tokens. The U.S. SEC uses the "Howey Test" to determine whether something constitutes a security.

2. RWA Project "Compliance" Layering

The compliance of RWA can be divided into four levels:

1. Sandbox Compliance: Such as the Hong Kong Monetary Authority's Ensemble sandbox project
2. Hong Kong Administrative Regulation Compliance: Included in the STO Framework Management
3. Clear regulatory framework for crypto-friendly regions
4. "Pan Compliance": Not temporarily recognized as non-compliant in certain offshore regions.

Currently, most RWA projects find it difficult to achieve the first two types of Compliance and tend to choose the third path.

3. Lawyer Recommendations for RWA Projects

1. Choose a policy-friendly jurisdiction
2. Ensure that the underlying assets are real and redeemable
3. Obtain investor recognition
4. Ensure that institutional operations in the chain are Compliance
5. Preventing post-event Compliance risks
6. Emphasize Brand Reputation Management

Conclusion

RWA projects need to promote innovation within a legal framework, forming industry standards through practice. At the same time, it is important to be vigilant about compliance risks and respect existing regulatory rules.