In the Web3 circle in 2025, hotspots change rapidly. Following DeFi, NFT, the metaverse, and meme, RWA (Tokenization of real-world Assets) has leaped to become the new top trend. For a time, slogans like “Asset on-chain reconstruction of the financial system” and “A new blue ocean of a trillion-yuan market” flooded the Internet. Various RWA industry associations, summits, alliances and forums sprang up like mushrooms after rain. However, only a few RWA projects were actually implemented. Behind this seemingly hot RWA wave, there are actually many cognitive misunderstandings and development predicaments hidden.
Myth 1: RWA is not a “new species”, but a “ledger innovation”
Many people are deceived by the fancy packaging of “Web3 innovation” and regard RWA as a completely new concept. In fact, in the traditional financial sector, the “tokenization of real assets” has long existed. People’s purchase of funds on Alipay, trading of A-shares through stock software, and subscription of bonds through bank apps are essentially manifestations of digital certificates of assets. Stocks represent equity, funds represent portfolio shares, and bonds represent creditor’s rights. The only difference lies in that the tokens of traditional finance are stored in the centralized databases of banks and securities firms, while the tokens of RWA rely on the decentralized ledger of blockchain. This is just like changing the accounting tool from Excel to Google Docs. The core function remains accounting, but the way of recording has changed.
Stocks achieved “asset tokenization” as early as the 17th century, evolving from paper certificates to electronic data. Nowadays, RWA is essentially “tokenization 2.0”, adding features such as immutability and decentralized verification to asset certificates, but the underlying logic remains “representing rights and interests with digital certificates”.
For instance, when holding Tencent stocks, the number of shares held displayed in the broker’s APP is the token of Tencent’s equity, which is stored in the broker’s database. If Tencent issues RWA equity, the Token received by users on the blockchain also represents the corresponding equity. The difference lies in that this Token can be freely transferred on the chain, while the trading of traditional stocks requires transfer through an exchange. Therefore, RWA does not create new assets but replaces traditional assets with more advanced ledgers.
Myth 2: The core of RWA is “putting equity certificates on the chain”, rather than data or assets on the chain
At present, the erroneous view that “data on the chain = assets on the chain” is widely spread. Some people think that scanning the property ownership certificate into a PDF and uploading it to the blockchain will turn the property into an RWA. This perception is completely wrong. Data is merely the carrier of information, while the core of assets lies in “rights”. Owning a house is not due to having a photo on the property ownership certificate, but rather the property rights information clearly registered in the housing administration bureau’s register. This is a right granted by law.
Those claims that tokens are 1:1 mapped to real assets and that holding tokens means owning assets are like castles in the air. A “mapping” without legal endorsement is of no practical significance. The key to RWA is not to move the asset entity onto the chain, but to tokenize the “equity certificates that prove ownership of the asset”. For instance, legally recognized equity certificates such as stocks, bonds, and property rights certificates can be converted into on-chain tokens. The essence of assets is rights, and the carrier of rights is the legally recognized certificate. What RWA needs to do is to use blockchain technology to repackage these certificates, improve the efficiency and transparency of circulation, but the prerequisite is that it must be based on the existing rights under the legal framework.
Myth 3: Beyond the law, RWA is merely “the emperor’s new clothes”
In the blockchain circle, it is often said that “code is law”, but in the RWA field, law is the decisive factor. Holding a Bitcoin private key means owning Bitcoin, because the rights of Bitcoin are completely defined by the blockchain code. The Token of RWA represents real assets, and the ownership of its rights is determined by the laws of each country. Take the RWA Token of real estate in the United States as an example. If the developer runs away, the holder cannot file a lawsuit in the US court merely with the private key. The US court will first review the legality of the Token within the local legal framework, whether the holder is a qualified investor, and whether the purchase process is compliant.
In China, if Beijing real estate is “put on the chain” and tokens are issued, according to Chinese law, the change of real estate property rights must be registered at the real estate registration center, and the circulation of tokens on the chain does not have legal effect. When homeowners sell their houses and Token holders seek redress, the court will only rely on the property ownership certificate rather than the blockchain records, as the law does not recognize such “on-chain rights certificates”.
Therefore, the core of RWA lies in the issue of legal construction, which needs to address three key problems: rights anchoring, compliance framework, and dispute resolution. Discussing RWA without the law is like building a castle in the air.
Myth Four: RWA is essentially a financial product and is hard to break free from the shackles of regulation
Many people regard RWA as a magic tool to disrupt finance, claiming that it enables ordinary people to invest in overseas real estate, top private equity funds, etc. But in fact, RWA is the tokenization of financial instruments, and finance is inherently subject to strict regional and regulatory restrictions.
All RWA are “financial products” and must follow the logic of financial regulation to protect investors, prevent risks and maintain market stability. The United States stipulates that investors purchasing RWA securities must be “qualified investors”, while China requires financial products to be approved and prohibits illegal fundraising. Those RWA projects that claim to be open to everyone are highly likely to involve illegal fundraising or regulatory arbitrage.
The regional nature of finance determines that RWA is difficult to achieve true “global circulation”. The real estate RWA tokens issued by the United States may be regarded as overseas securities in China and cannot be sold to Chinese investors without approval. And vice versa. Even if global circulation can be achieved technically, legal recognition remains a huge obstacle. At the same time, financial risks will not disappear just because they are on the chain. RWA may even make risks more concealed due to its decentralized nature.
The difficulty in implementing RWA: Three “gates of Hell” need to be overcome
The current RWA circle seems bustling, but there are very few projects that have actually been implemented. The main reason is that their implementation needs to overcome three major obstacles: legal compliance, asset penetration, and investor protection.
Legal compliance is the greatest challenge. In the United States, the SEC regards most RWA as “securities”, and they must comply with the Securities Act, complete registration or obtain an exemption. In China, all activities involving asset securitization and the issuance of financial products must go through strict approval. Unauthorized issuance may be suspected of being illegal.
Asset penetration is related to investors’ trust and the issue of asset authenticity needs to be addressed. Real estate RWA must ensure that the on-chain Token corresponds to the real property and the property rights are clear. This requires professional asset evaluation, due diligence and legal confirmation of rights. The blockchain can only record the results and cannot replace the offline legal process.
In terms of investor protection, traditional finance has mature mechanisms. However, under the decentralized architecture of RWA, there is a lack of regulatory entities, making it difficult to guarantee investors’ rights to information and redemption, and the channels for rights protection are also unclear.
The Future of RWA: Return to the Essence of Tools and Move Forward in Compliance
RWA is not without value. It has great potential in improving the efficiency of asset circulation, reducing financing costs, and activating the liquidity of niche assets. But to realize these values, it is necessary to tear off the “myth” label and return to the essence of being a “tool”. Future RWA should prioritize compliance and be issued within a specific legal framework. With the assistance of technology, utilize blockchain to enhance the efficiency of voucher circulation; Focus on vertical scenarios, start with standardized assets, and gradually advance.
For investors, RWA is not a shortcut to making money effortlessly, but a financial tool that requires risk assessment, legal review and compliant investment. Those projects that blindly promote “assets on the chain and global circulation” need to be kept on guard. The truly valuable development of RWA should be rooted in legal compliance, asset rights confirmation and investor protection, rather than remaining at the level of slogans and concept hype.
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