The passage of the Hong Kong Stablecoin Draft, the U.S. GENIUS Act, the EU’s MiCA, and Southeast Asia’s regulatory bills undoubtedly marks a significant step forward for the application of Real World Assets (RWA).

What is RWA?

RWA (Real World Assets) refers to the process of tokenizing real-world physical assets (such as real estate, gold, art, etc.) or property rights (such as claims, revenue rights, fund shares, etc.) through blockchain technology, converting them into digital tokens that can circulate on-chain. This innovative model enables asset fractionalization, public ledgers, free circulation, and automated management. It relies on the immutability of blockchain and the automatic execution capabilities of smart contracts, and it requires legal frameworks to ensure the consistency of on-chain rights with underlying asset ownership. In layman’s terms, RWA is akin to asset securitization in traditional finance but is more novel and flexible.

Demystifying RWA Tokenization and Comparing Global Regulatory Landscapes

For example, suppose you own a house worth 3 million yuan. In reality, if you want to sell it, you would need to list it with real estate agencies and channels like Anjuke. You would have to entertain multiple potential buyers, negotiate prices, and eventually sell the entire property to a buyer who pays in full. This process is time-consuming and involves complex procedures. However, if you tokenize the house using blockchain technology, converting it into a digital token called “house,” you could divide the ownership of the 3 million yuan property into 30,000 house tokens, each worth 100 yuan. Each house token represents one-thirtieth of a percent ownership of the property. In this way, anyone could purchase one-thirtieth of a percent ownership of the property for just 100 yuan and freely trade these tokens—this is RWA.

However, as we know, in Mainland China, changes in real estate ownership require registration at the real estate registration center. If a property were tokenized and issued as house tokens as described above, would purchasing a house token grant you the corresponding property rights? Clearly not, as this would conflict with Chinese law.

In fact, the core of RWA is not to physically move the asset onto the blockchain (houses and equity cannot be moved), but to tokenize the “certificates that prove ownership of the asset”—for example, converting legally recognized certificates such as stocks, bonds, and property deeds into on-chain tokens. In other words, the essence of the asset is “rights,” and the carrier of these rights is “legally recognized certificates.” RWA aims to repackage these “legally protected certificates” using blockchain technology to make their circulation more efficient and transparent. However, the prerequisite is: there must first be a legal framework for the rights, followed by the on-chain token.

Of course, from this, it can be seen that the first step of RWA is tokenization—issuing RWA project tokens.

Securitization of RWA Tokens

(I) Classification of Tokens

When it comes to the securitization of RWA tokens, it is essential to understand the classification of cryptocurrencies. However, since there is no unified classification standard among countries, regions, and organizations worldwide, the current classification of cryptocurrencies is still in a state of confusion. Below are the general classifications of cryptocurrencies in various regions around the world:

1. Hong Kong, China

The Securities and Futures Commission (SFC) of Hong Kong, in conjunction with the Hong Kong Monetary Authority (HKMA), categorizes tokens into two types: security tokens and non-security tokens. Security tokens are regulated under the Securities and Futures Ordinance, while non-security tokens fall under the purview of the Anti-Money Laundering Ordinance.

1. Singapore

The Monetary Authority of Singapore (MAS) classifies cryptocurrencies into three categories: utility tokens, security tokens, and payment tokens. However, on March 27, 2025, MAS released the Consultation Paper on the Prudential Treatment of Cryptoasset Exposures and Requirements for Additional Tier 1 and Tier 2 Capital Instruments for Banks, proposing to align the classification of crypto assets with the Basel standards.

1. United States

In the United States, tokens are divided into commodities and securities, with no further detailed classification for cryptocurrencies. The U.S. Commodity Futures Trading Commission (CFTC) has explicitly classified Bitcoin and Ethereum as commodities. The U.S. Securities and Exchange Commission (SEC) uses the "Howey Test" to determine whether an asset qualifies as a security. However, there is a regulatory conflict between the SEC and CFTC on whether a cryptocurrency is a "security" or a "commodity."

The Howey Test is a legal standard used by the SEC and courts to determine whether a transaction constitutes a "security" (particularly an "investment contract").

According to the Howey Test, a transaction is considered a "security" and must comply with U.S. securities laws if it meets the following four conditions:

a) An investment of money

b) In a common enterprise

c) With the expectation of profit

d) Solely from the efforts of the issuer or a third party

In 2019, the U.S. Securities and Exchange Commission ruled that Bitcoin did not pass the Howey Test. According to the ruling, Bitcoin only meets the first criterion of the framework, which is the necessity of an investment of money. However, since there is no central company controlling Bitcoin, the SEC ruled that Bitcoin does not meet the other requirements of the Howey Test: investors are not pooling their money into a "common enterprise," and the value of Bitcoin does not depend on a third party (i.e., the product developers).

1. European Union

The EU’s Markets in Crypto-assets (MiCA) Regulation classifies crypto assets into e-money tokens, asset-referenced tokens, and other crypto assets. Notably, the EU divides what we commonly refer to as stablecoins into two categories: e-money tokens and asset-referenced tokens.

1. Basel Committee

The Basel Committee on Banking Supervision (BCBS) is the primary global standard-setter for the prudent regulation of banks and provides a platform for regular cooperation on banking supervisory matters. Its 45 members include central banks and bank supervisory authorities from 28 jurisdictions. The Basel Framework is a comprehensive set of standards issued by the BCBS, which its members have agreed to fully implement and apply to internationally active banks within their jurisdictions. The BCBS’s SCO60 - Cryptoasset Exposures classifies crypto assets into the following categories:

Why Securitize RWA Tokens?

As mentioned earlier, although major regions worldwide have not yet established a unified standard for token classification, both Hong Kong, Singapore, and the United States have classifications for security tokens.

So, the question arises: which category does an RWA token belong to?

In fact, the classification of RWA tokens should be based on the underlying real-world assets:

A small portion of RWA tokens are non-security tokens. For example, USDT and USDC, which dominate the stablecoin market, are products of tokenizing the U.S. dollar, a real-world asset. It can be said that USDT and USDC are also RWA, but they definitely do not belong to the category of security tokens.

Most RWA tokens are security tokens. For example, BlackRock’s tokenized fund BUIDL, if you invest $1,000 into the BUIDL fund, the fund promises to provide each token with a stable value of $1 while also managing the investment to generate returns for the holders.

Since most RWA tokens are likely to be classified as security tokens, they must be securitized (i.e., recognized as securities). This means that these RWA tokens must comply with the regulatory policies and laws for securities in their circulation regions. Otherwise, if found non-compliant, they may face severe consequences, ranging from hefty fines to criminal risks.

Global Regulatory Landscape for RWA Tokens

At present, there are no specific regulatory policies tailored for RWA tokens. Essentially, RWA tokens are a type of crypto asset, and their regulation still falls under the general regulatory policies and laws for crypto assets in various regions.

(I) Hong Kong, China

Hong Kong’s regulatory draft for RWA stablecoins was officially passed on May 21, 2025. It delves into eight key points regarding the compliance framework and regulatory possibilities for RWA stablecoins:

1. Licensing regime and entry barriers

2. Reserve asset requirements

3. Transparency and information disclosure

4. Anti-money laundering and counter-terrorist financing

5. Regulatory authorities’ law enforcement powers

6. Cross-border coordination and enforcement powers

7. Investor protection mechanisms

8. Technological advancements and sustainable regulation

Under the Stable Coin Ordinance Draft, any entity engaging in fiat-backed stablecoin issuance, promotion, or related activities in Hong Kong must meet specific conditions. For example, obtaining a license from the Hong Kong Monetary Authority, the company’s qualifications, the purpose of issuance and target audience review, anti-money laundering measures, and ongoing supervision after licensing. Potential points of conflict and the need for balance, such as the contradiction between innovation and regulation, should be noted. It is important to recognize that overly stringent licensing requirements may hinder market innovation.

Reserve asset requirements primarily focus on whether the licensee possesses "high-quality and highly liquid assets." For example, cash, short-term government bonds, repurchase agreements, and other near-cash assets. These assets have two core characteristics—low volatility and high liquidity, enabling them to be quickly converted into cash to maintain the fixed exchange rate between the stablecoin and the pegged asset during market fluctuations or large-scale redemptions. Under the Stored Value Facilities (SVF) license, licensed institutions are required to deposit a security of HK$25 million or 5% of the asset scale. For stablecoin licensing standards, we can also refer to this. For example, if issuing HK$10 billion in stablecoins, the reserve assets must be ≥ HK$10 billion in fiat currency to ensure that the stablecoin can be redeemed at face value and to guard against挤兑风险.

Transparency and information disclosure of stablecoins are crucial for market safety and establishing market confidence. Looking at traditional finance, investors’ confidence in a trading market determines the market’s efficiency and capacity. This is why publicly traded companies in the stock market are required to disclose certain financial information (e.g., the 10K, 10Q, 8K, 13F... required by the SEC) on a quarterly and annual basis, allowing investors to have more trust in the market and ensuring the certainty and security of their investments.

Another issue highlighted in the draft is that stablecoins, due to their anonymity and cross-border liquidity, may be exploited by criminals for money laundering and terrorist financing. To address this, a set of targeted rules has been proposed to ensure that stablecoin transactions are legal and transparent. The three key elements in tackling this issue are identity verification (KYC), fund tracing, and record-keeping. The draft plans to further align with international standards (such as the FATF’s Guidance on Virtual Assets). As long as the transparency of funds and a reasonable degree of privacy are ensured, this issue can be resolved.

Additionally, the Stable Coin Ordinance Draft grants the Financial Secretary (Monetary Authority) extensive law enforcement powers to ensure the compliance of the stablecoin market. For instance, if there is suspicion that a stablecoin issuer has misappropriated reserve assets, the authority can directly access their financial records and transaction data. If necessary, it can appoint third-party institutions (such as accounting firms) to assist in the investigation, and even hire international expert teams to break down cross-border money laundering chains.

In the context of globalization, the Stable Coin Ordinance Draft of Hong Kong constructs a global regulatory network through cross-border coordination mechanisms and strong enforcement powers, ensuring that the issuance and trading of stablecoins are legal and compliant. For example, if a foreign stablecoin issuer is suspected of money laundering, the Hong Kong Monetary Authority can request assistance from local regulatory authorities (colloquially known as "offshore fishing"). By obtaining regulatory rights over foreign entities, emergency disposal rights, and the cross-border applicability of criminal and civil sanctions, the draft paves the way for the global compliance of stablecoins.

In summary, after the passage of this draft, a "firewall" for investor protection has been built through six mechanisms: standardized entry screening, risk isolation, transparent disclosure, tiered sales, rapid compensation, and severe punishment for violations. The core logic is as follows:

Pre-issuance: Strictly control the qualifications of issuers to prevent "something for nothing";

During issuance: Enforce transparent operations to prevent backroom dealings;

Post-issuance: Provide avenues for relief to reduce the cost of维权.

This framework not only lays a compliance foundation for Hong Kong’s stablecoin market but also sets a global benchmark for investor protection—embracing innovation while ensuring that "retail wallets" are not eroded by financial冒险行为. A severe punishment and enforcement framework has been established, with fines of up to HK$5 million and imprisonment of up to 7 years for unlicensed issuance or false advertising, or up to HK$10 million and 10 years imprisonment in the most serious cases.

In the future, Hong Kong may further explore embedding smart contracts with compliance rules, using blockchain technology to achieve automated regulation while protecting user privacy. With "risk control" and "orderly innovation" as the core, this approach not only injects a compliance gene into Hong Kong’s virtual asset ecosystem but also contributes Eastern wisdom to global financial governance. While guarding the底线 of safety, Hong Kong is welcoming the future of fintech with an open attitude, aiming to become the "super connector" for virtual asset regulation and innovation.

(II) The U.S. GENIUS Act

On May 19, 2025, the U.S. Senate passed the procedural vote for the Guiding and Establishing National Innovation for U.S. (GENIUS) Act with a vote of 66 in favor and 32 against. The bill provides a precise definition of stablecoins, who can issue them, and the requirements for issuance. The most notable aspect is the reserve requirement for stablecoins.

The bill stipulates that U.S. licensed stablecoins must have 100% reserves backing the issued stablecoins, which must be in cash or cash equivalents or short-term bills, CDs with liquidity. Regular audits and disclosures of these reserves are also required. Each stablecoin issuer will have an 18-month transition period to adjust liquidity to comply with the new regulations. As of now, the stablecoin named USD1 traded on platforms is in full compliance.

The GENIUS Act also mentions that algorithmic stablecoins will gradually phase out and some will be banned. The 2022 Terra/Luna death spiral incident exposed the fatal flaws and unstable nature of algorithmic stablecoins, necessitating stricter legal controls to prevent similar events. The bill also strengthens anti-money laundering (AML) measures, addresses various concerns about利益冲突, and prohibits U.S. government officials from issuing stablecoins. It ensures legal backing for Web3.0 and continuous education to reduce fraud, money laundering, and other cybercrimes.

(III) Singapore

On January 14, 2019, Singapore passed the Payment Services Act (PSA), which has been continuously revised to serve as a "forward-looking and flexible framework for regulating Singapore’s payment systems and payment service providers." This act replaced the previous Payment Systems Supervision Act and the Money-changing and Remittance Businesses Act. Additionally, the Monetary Authority of Singapore (MAS) issued Notice PSN01 (Prevention of Money Laundering and Terrorism Financing – Designated Payment Services) under the PSA, introducing anti-money laundering (AML) and countering the financing of terrorism (CFT) requirements for regulated payment service providers. This means that payment service providers must implement the following measures to achieve regulatory compliance:

Risk assessment and mitigation

Customer due diligence

Reliance on third parties

Agent accounts and wire transfers

Record-keeping

Suspicious transaction reporting

Internal policies, compliance, audit, and training

On March 27, 2025, the Monetary Authority of Singapore released the Consultation Paper on the Prudential Treatment of Cryptoasset Exposures and Requirements for Additional Tier 1 and Tier 2 Capital Instruments for Banks, aiming to implement the Basel Committee on Banking Supervision’s (BCBS) updated prudential treatment and disclosure standards for cryptoasset risks. It mentions that crypto assets that meet all classification criteria are classified as Group 1a crypto assets (tokenized versions of traditional assets) or Group 1b crypto assets (crypto assets that aim to maintain a stable value pegged to a predefined reference asset or assets, and have an effective stabilization mechanism).

For crypto assets classified as Group 1b crypto assets, the BCBS’s prudential treatment of crypto asset exposures stipulates a redemption risk test to ensure that the reserve assets are sufficient to allow the crypto asset to be redeemed at the pegged value at any time. To pass the redemption risk test, banks must ensure that the reserve assets of the crypto asset meet conditions related to the value and composition of the reserve assets, as well as the management of the reserve assets.

(IV) European Union

In June 2023, the EU officially released the Markets in Crypto-assets Regulation (MiCA). The regulatory targets of MiCA are divided into two categories:

1. The first category is crypto asset issuers, including stablecoin issuers and other cryptocurrency issuers.

MiCA has the following main requirements for stablecoin issuers:

Obtain authorization before issuance

Fulfill disclosure obligations

Hold a certain scale of own funds and reserve assets

MiCA’s requirements for other crypto asset issuers are relatively relaxed:

The issuer must establish a legal entity within the EU

Publish a white paper

1. The second category of regulatory targets is crypto asset service providers. MiCA’s requirements for crypto asset service providers mainly include the following four aspects:

Obtain authorization

Have a sound governance structure

Meet minimum capital requirements

Comply with consumer protection and transparency requirements