Author|Shen Zhuoyan

Source|Lingyi Think Tank

On August 28, the Hong Kong Monetary Authority (HKMA) held a press conference to announce the progress of the first phase of the Ensemble project (sandbox) and provided detailed introductions to four tokenization theme cases.

At the press conference, the first domestic new energy physical asset-based RWA completed by Langxin Group (300682, SZ) in collaboration with Ant Digital in Hong Kong was officially announced. This is one of the four tokenization theme cases in the progress of the HKMA sandbox project and has garnered the most attention. Specifically, this project was issued on Ethereum, and Langxin secured RMB 100 million in financing.

This is the first RWA for domestic new energy physical assets, signifying the opening of a new capital channel.

01

"Charging Station Digital Assets"

RWA (Real World Assets-tokenization) refers to converting the relevant rights of traditional financial and physical assets into digital tokens on the blockchain, which represent ownership or shares of traditional financial and physical assets. It provides unique and promising financing channels for enterprises with physical assets, bridging the gap between assets and capital, and connecting the real-world assets with the cryptocurrency market. RWA is considered one of the most promising applications of blockchain technology.

According to introductions, in the first RWA trial, Langxin's Xindiantu, as the operator and service provider of the new energy digital platform, tokenized some of the charging stations operated on the platform as RWA anchor assets, issuing "Charging Station" digital assets on the blockchain based on credible data, with each digital asset representing a portion of the revenue rights of the corresponding charging station. Antchain, a subsidiary of Ant Digital, provided technical support to ensure the security, transparency, and immutability of asset data on the blockchain.

Public data shows that 85% of public charging services are currently provided by private enterprises, with over 82% of operators owning less than 10 charging stations, and over 50% of operators having an overall investment of less than RMB 1 million. These operators focus more on localized operation services, making it easier for them to obtain local resources and establish stable service partnerships with surrounding resources. However, relatively, they also face the pain point of mismatching financing needs with financing solutions.

The implementation of the first RWA project for new energy physical assets signifies that Ant Digital has facilitated the credible data circulation of physical assets using digital technology. By digitizing physical assets and opening up new financing channels, industry Web3, represented by RWA, is entering a pivotal moment of truly empowering physical enterprises.

Prior to this, traditional financial institutions and internet giants have significantly increased their layouts and accelerated the application speed of RWA.

02

Giants Laying Out Strategies

Based on the advantages of high efficiency, low barriers, and risk diversification compared to traditional finance, RWA has become the new darling of capital, attracting layouts from major financial institutions and internet giants.

Before Ant Digital and Langxin Group announced the first RWA project for new energy physical assets, Goldman Sachs launched a digital asset platform in 2023, helping the European Investment Bank issue €100 million in digital bonds. Subsequently, electrical giant Siemens issued €60 million in digital bonds on the blockchain for the first time. Other financial giants such as HSBC, JPMorgan Chase, and Citigroup are also exploring tokenized government bonds.

In March 2024, BlackRock launched its first tokenized fund issued on a public blockchain, while HSBC, JPMorgan Chase, and Citigroup are also exploring tokenized government bonds.

A BCG report predicts that the value of global tokenized assets will reach $16 trillion by 2030, accounting for 10% of global GDP. RWA is a crucial component of global tokenized assets.

Wang Yang, Vice President of the Hong Kong University of Science and Technology and Chief Scientist of the Hong Kong Web3.0 Association, believes that the introduction of blockchain technology has revolutionized RWA compared to traditional securitization.

Wang Yang argues that RWA offers transparency and security while enhancing liquidity by enabling fractional ownership. This approach not only addresses the inefficiencies of traditional financial systems but also breaks down their restrictions, digitizing and uniquifying assets, shortening the gap between traditional and new finance, satisfying users' personalized financial needs, and lowering investment barriers. This will stimulate more small and medium-sized investors to enter and participate in financial activities, thereby creating significant value and returns. Meanwhile, RWA injects liquidity and diversity into the real economy by expanding asset types and increasing capital scales.

Bai Haifeng, Co-Head and Managing Director of CMB International Asset Management, wrote that the core value of RWA lies in its role as a bridge connecting the digital asset world, specifically manifested in four aspects: 1) Closely integrated with decentralized finance ， Huge potential ； 2) Optimized the traditional financial asset trading model ； 3) Enhance the liquidity of physical assets ； 4) Having fragmented characteristics ， Lowering the investment threshold ， Increase additional liquidity 。

Bai Haifeng believes that the most exciting feature of RWA is the trading of fund token secondary markets. "As the RWA market matures, the price of fund tokens fully traded in the secondary market can more accurately reflect the value of the fund."

Wang Yang and others recently wrote that the next stage of development for Hong Kong and even the global Web3.0 lies in breaking down the barrier between the virtual and real worlds, enabling assets and capital to flow freely between the two systems. RWA is a crucial innovation for bridging this gap, accelerating the integration of the virtual and real worlds. RWA not only enhances transparency and security through blockchain technology, addressing some issues in traditional financial systems but also fundamentally revitalizes more physical assets, injecting more liquidity into the real economy and digital economy.

03

Hong Kong's New Blue Ocean

The rapid development of RWA cannot be separated from regulatory support.

In response to Proposal No. 02969 of the 14th National Committee of the CPPCC, the Ministry of Industry and Information Technology indicated that it would strengthen research on Web3, formulate a Web3 development strategy document suitable for China's national conditions, clarify the development path, technical focus, and application models of Web3, and handle the relationship between inheritance and innovation, development and security, government and market, and supply and demand.

Compared to mainland China, Hong Kong has gradually introduced relatively mature Web3 ecological policies and regulations in recent years. From the Hong Kong Financial Secretary's "Policy Declaration on the Development of Virtual Assets in Hong Kong" to the two circulars on intermediaries engaging in tokenized securities-related activities and tokenized securities and investment products recognized by the Securities and Futures Commission (SFC), these documents clarify the SFC's considerations and regulatory measures for tokenized securities, including clarifying and relaxing some of the original policies.

The "Policy Declaration on the Development of Virtual Assets in Hong Kong" states that if we broaden our horizons to explore more applications of virtual assets, such as trading artworks and collectibles, tokenizing antique objects, or tokenizing various products (e.g., debt securities) from a financial innovation perspective, we will undoubtedly encounter even greater opportunities.

The "Declaration" also asserts that "virtual assets know no bounds."

On February 20, 2024, the HKMA issued the circular "Sale and Distribution of Tokenized Products," outlining the expected regulatory standards that authorized institutions must adhere to when selling and distributing tokenized products, i.e., real-world assets (RWA) expressed in digital form using distributed ledgers or similar technologies, to clients.

Wang Yang believes that regulatory frameworks constitute the foundation of RWA, determining which assets can be tokenized and the rules that must be followed during the tokenization process.

Financial assets subject to tokenization, such as stocks, bonds, and funds, have clear legal definitions in the Hong Kong market. Hong Kong's regulatory agencies have established clear regulatory guidelines and a multi-tiered regulatory system, attracting numerous enterprises and consolidating Hong Kong's position as an international trading port and global financial center.

Hong Kong is renowned globally for its adaptable and well-defined financial regulatory environment. More importantly, the Greater Bay Area adjacent to Hong Kong and even the entire mainland are the primary sources of real assets for Hong Kong's virtual asset market. The introduction of RWA will significantly benefit Hong Kong's virtual asset market.

Hong Kong has been active in virtual asset trading platform (VATP) compliance, tokenization, and exchange-traded funds (ETFs) over the past two years, prompting several experts to suggest accelerating the promotion of RWA and tokenization practices through stablecoins in a compliant environment.

On the other hand, Hong Kong's recent breakthroughs in stablecoin development have also facilitated RWA's growth.

In December 2023, the Hong Kong Financial Services and the Treasury Bureau (FSTB) and the HKMA jointly issued a consultation paper on the proposed regulatory regime for stablecoin issuers. In March 2024, the HKMA announced the "Stablecoin Issuer Sandbox" policy, allowing the testing of stablecoin issuance within the regulatory sandbox. In July 2024, the FSTB and the HKMA released a consultation summary, compiling public opinions and feedback, and proposing legislative proposals for implementing a regulatory regime for stablecoin issuers in Hong Kong.

In July 2024, the HKMA announced the first batch of participants in the stablecoin regulatory sandbox, including Standard Chartered Bank (Hong Kong) Limited, Anyi Group Limited, Hong Kong Telecommunications (HKT) Limited, and JD Technology's JDCoinchain Company. Tianxing Bank, a subsidiary of Xiaomi, is also collaborating with JDCoinchain Technology within Hong Kong's regulatory sandbox.

The advancement of stablecoins facilitates the rapid development of RWA. "Building the RWA ecosystem requires multi-dimensional support from capital, technology, and regulation, as well as new digital infrastructure to support the liquidity released through digitization and tokenization. Hong Kong dollar-pegged stablecoins serve this purpose," Wang Yang and others wrote. "In the foreseeable future, the majority of RWA transactions in Hong Kong will be completed through compliant Hong Kong dollar-pegged stablecoins, connecting and interoperating with traditional finance through these stablecoins. ... The introduction of a regulatory framework for stablecoins may lay the foundation for the innovative development of Hong Kong's RWA ecosystem, and as the RWA ecosystem flourishes, the role and value of Hong Kong dollar-pegged stablecoins as a bridge connecting Hong Kong's Web3.0 to the outside world will become even more prominent."

Another notable feature of RWA is that the value of different types of tangible and intangible assets can be tokenized, meaning that RWA breaks through the constraints of the traditional financial primary market, enabling more diverse trading content in the digital economy and facilitating more flexible and convenient financing channels.

For corporate financing, RWA represents a qualitative breakthrough—assets accumulated through actual business operations but unquantifiable within traditional financial systems can now be reasonably priced through digitalization, becoming digital assets that are clear and understandable to capital providers.