Key Legal Considerations for the Issuance of Real-World Assets (RWA)
Amid the vigorous development of the digital asset sector, Hong Kong, as a major financial hub, has drawn significant attention to legal issues surrounding the issuance of real-world assets (RWA). To help Web3 practitioners gain an in-depth understanding of the key legal considerations and become familiar with the regulatory framework for RWA issuance in Hong Kong,the Hong Kong Registered Digital Asset Analysts Society and Uweb have jointly launched the “Digital Asset Analysts Elite Series” online live-streaming event.
Mr. Liu Honglin, Founder of Mankun Law Firmhas been invited to participate in this online live session to provide an in-depth analysis of the key legal issues in RWA issuance in Hong Kong, exploring together the intricacies of the legal landscape for RWA issuance!
(The audio transcript has been processed by AI and may contain omissions or errors.)
Moderator (Wang Hongbin, Secretary-General of the Hong Kong Registered Digital Asset Analysts Society):Welcome everyone to tonight’s live broadcast, the fifth episode of the “Digital Asset Analysts Elite Series” hosted by the Hong Kong Registered Digital Asset Analysts Society.
Established in Hong Kong in 2023, the Hong Kong Registered Digital Asset Analysts Society has witnessed Hong Kong’s active embrace of Web3 in recent years. This year, Hong Kong introduced the “Digital Asset Policy Statement 2.0,” a key aspect of which is the vigorous development of supporting financial and talent ecosystems. Our Society is committed to supplying qualified talent to the industry and issuing certifications through professional examinations administered by the Hong Kong Examinations and Assessment Authority. We hold weekly events, inviting renowned institutions and industry leaders to share insights on hot topics, conduct in-depth case analyses, and discuss career development pathways.
I am Wang Hongbin, Secretary-General of the Society. Today, we focus on a highly topical subject—key legal considerations for RWA issuance in Hong Kong. The Web3 industry is an emerging sector experiencing robust growth in Hong Kong,and its future development hinges on institutionalization and compliance, with compliance becoming the central theme of industry development.This is because, without a sound legal framework, many highly skilled professionals and stable institutions would be unable to enter this industry.
Therefore, for today’s topic we have invitedAttorney Liu Honglin, a legal expert in Web3, to share his insights with us. Attorney Liu is an atypical lawyer. In addition to his professional legal background, he is also an entrepreneur with internet startup experience. He previously served in Tencent’s Strategic Investment Department, accumulating substantial commercial experience and perspectives. These experiences enabled him to successfully take this stepand establish Mankun Law Firm as the leading law firm in the Web3 industry.
To begin, I would like to invite Honglin to introduce his background and provide an overview of Mankun Law Firm, so that we may become more familiar with these matters. Welcome, Attorney Liu!
Attorney Liu Honglin:Thank you, and good evening, everyone. Allow me to introduce myself. I am Liu Honglin, and I currently focus on the specialized legal field of Web3 and blockchain. As mentioned earlier, I consider myself an“atypical lawyer.”Since graduation, I have pursued a career at the intersection of law and the internet. Approximately seven or eight years ago, I was responsible for product, operations, commercialization, and the group’s investment and financing modules at a legal-tech internet company under Tencent’s Strategic Investment Department. I began engaging with blockchain during the ICO boom in 2017–2018. Through this process, I connected with many partners working on blockchain projects and gained insight into the industry’s commercial and compliance needs. By chance, I also participated in blockchain-related research and academic activities during my time at university. This experience, which I might describe as a form of “self-conviction,” led me to believe that blockchain represents a significant direction for future development. Accordingly, Mankun Law Firm constitutes our team’s second entrepreneurial venture.
Starting in 2021, I observed demand for legal counsel specializing in blockchain and crypto assets, both in mainland China and overseas. In response, we founded Mankun Law Firm.Three years ago, Mankun Law Firm was the first law firm in China dedicated exclusively to Web3. Three years later, we remain the only such firm., so the legal profession as a whole remains relatively conservative. In the course of building our firm, we have continually earned recognition from peers in the industry and attracted many like-minded legal professionals. We currently maintain offices in Shanghai, Hong Kong, Shenzhen, and Hangzhou, with a team of approximately fifty professionals, making us arguably the Chinese-speaking region’slegal services provider with the highest concentration of Web3 lawyers.
We not only provide interpretations of laws and regulatory policies and conduct in-depth research in the stablecoin and real-world assets (RWA) sectors, but also work alongside clients to explore the balance between commercial objectives and regulatory compliance, accompanying them as they “cross the river by feeling the stones.”
Where do the legal needs of the Web3 industry lie?
Moderator:Thank you, Attorney Honglin. It is uncommon for lawyers to start their own firms or enter new practice areas, as professional experience and risk management tend to make them more conservative. Nevertheless, we have indeed observed robust demand for legal services in the Web3 industry. Business operations often involve matters of commercial law and criminal law, requiring legal interpretation in many instances. Our own company has also received assistance from Mankun Law Firm in the course of its business operations.
Accordingly, could you please introducethe primary modules within Mankun’s current scope of business, and identify the current points of legal conflict or demand in the Web3 industry?
Attorney Liu Honglin:The range of legal services we provide to the Web3 industry is becoming increasingly comprehensive and well-developed. I categorize our practice into four major segments.
The first segment is criminal risk prevention and criminal defense in cases involving virtual currencies,which accounts for approximately 15%–20% of our business mix. This is a top concern for many industry participants: entrepreneurship is welcome, but one must not lose their freedom.
The second area involves the resolution of disputes concerning virtual currencies, such as those arising from lending, partnership investments, entrusted investments, and divorce-related property divisions involving Bitcoin, USDT, or similar assets. Local courts vary significantly in their recognition of virtual assets; courts in Shanghai may provide support, whereas courts in certain inland cities may refuse to accept such cases.
The third area involves commercial services related to virtual currencies or blockchain technology, which account for approximately 40% to 50% of our practice. This segment serves two categories of clients.One category comprises "listed companies or large conglomerates"that seek to allocate crypto assets, transition their core businesses to Web3, raise financing through real-world assets (RWA) and blockchain technology, or integrate blockchain technology with their core operations. These cross-border expansions entail issues under mainland China’s regulatory policies, and we assist such listed companies or corporate groups inproviding commercial and compliance consulting, designing and establishing overseas corporate structures, and applying for licenses.This is a highly significant practice area, particularly following the introduction of stablecoins in Hong Kong this year. Most domestic companies engaged in cross-border payments have had some degree of business interaction with Mankun Law Firm. We have also provided cross-border compliance services to several leading clients in this sector.The other category consists of startup teams, many of which originate from major internet companies or native Web3 teams, exploring opportunities at the intersection of AI and Web3. We provide end-to-end services, including assisting with the establishment of corporate entities or foundations and facilitating investment and financing collaborations.end-to-end services.
The fourth area covers non-standard matters, such as legal recourse for stolen or defrauded virtual currencies and asset recovery following loss.and even certain local governments and public security organs consult us on compliance matters in cases involving virtual assets.
Therefore, overall, as hot sectors within this industry emerge, or as demand for specialized legal services arises, we promptly refine our offerings,aligning with client needs to provide actionable legal support. This constitutes our overall business structure.
What are real-world assets (RWA)?
Moderator: Thank you, Honglin. Based on Honglin’s introduction, we observe thatthe Web3 industry is inseparable from legal services.On the one hand, the rapid development of the Web3 industry inherently entails significantlegal uncertainty.For example, regulatory approaches to and definitions of virtual assets vary across jurisdictions, directly affecting contract formation and dispute resolution. On the other hand, while U.S.-listed companies are increasingly adopting a new DAT model, Hong Kong is still exploring such approaches,presenting substantial opportunities and room for growth.This also leads me to believe that market demand for compliance and legal services is growing rapidly. For instance, within our institute’s certification system, many lawyers are seeking to transition into this field.
This brings us back to today’s topic—RWADoes it constitute a new type of financing model? At the very least, we consider it a novel method of asset issuance that aligns with the fundamental definition of blockchain and represents one of the most proven pathways for digital assets. Although Hong Kong provides a favorable sandbox environment for the issuance of real-world assets (RWA), and we have observed that overseas jurisdictions such as the United States have established certain legal frameworks, including through the enactment of stablecoin legislation, I have found in my discussions that many entrepreneurs and listed companies still hold a rather fragmented understanding of RWA.
Therefore, I would like to invite Attorney Liuto share, from a structural framework perspective, the key milestones and essential considerations throughout the process of issuing RWA in Hong Kong or other markets.I hope this will help everyone develop a clearer understanding.
Attorney Liu Honglin:Thank you, Hongbin.Our legal services are primarily driven by our clients’ actual needs.Over the past year, we have engaged with numerous clients seeking advice on RWA, but we have found that their understanding of “RWA” varies significantly. Currently, RWA offerings in the market can be broadly categorized into three types:
The first category is the tokenization of securities assets. This category has the strongest linkage to capital markets. Its core involves tokenizing, or mapping onto on-chain tokens, the equity interests of listed companies, and even unlisted companies. A typical example is the business model pursued by Robinhood, where purchasing a token corresponds to holding shares of a Nasdaq-listed company or associated economic rights. Naturally, service providers offering such solutions adopt different compliance strategies for the U.S. domestic market and overseas clients.
The second category is the model whereby mainland China-based assets raise financing through the Hong Kong market.For example, in projects such as Ant Group, Longshine, and GCL New Energy, the model involves using a “two-chain, one-bridge” architecture or other methods to record mainland assets or operational data on a blockchain, then raising capital from qualified investors in Hong Kong (such as family offices and traditional funds), and finally generating a token as evidence of the investment share. This model closely resembles what is often referred to as “real-world assets (RWA)” in many training sessions held in the mainland. Its characteristics include: the underlying assets are typically non-standardized or physical assets, rather than highly financialized assets, and the secondary market liquidity of the tokens is very weak, serving more as asubscription certificate, which currently cannot be freely traded in the market.
The third category is more grounded and can be understood as the tokenization of commodity pre-sales or membership benefits.This is common under the mainland framework, where pre-sale commodities are combined with membership card benefits and NFTs or tokens. A typical example is a charging pile project in Nanjing, where spending RMB 99 or 199 essentially purchases an NFT (or token) corresponding to a certain consumption quota. Meanwhile, the project promoter promises to reward participants with 20%–30% of future operating profits in the form of points or consumption credits. Listed companies such as “Hainan Huatie” have also made similar attempts, trying to distribute a certain percentage of corporate dividends as rewards to token holders. These cases are essentiallymembership marketing and commodity pre-sales, using tokens to promote sales and user engagement.
In summary, the client needs we encounter basically fall into these three categories:tokenization of traditional securities or financial products; mainland high-quality projects raising capital overseas through tokenization; and purely mainland structures using tokenization to promote commodity sales and user engagement.
What mechanisms for RWA in Hong Kong still need improvement?
Moderator: Thank you. The second model you mentioned earlier—cases involving early cooperation with Ant Group and issuing RWA tokens through the “two-chain, one-bridge” mechanism—has indeed received positive feedback in the domestic capital market. We have observed that although the issued tokens have virtually no liquidity in the secondary market, the stock prices of the parent companies acting as issuers have been enthusiastically embraced by the market. However, as a mature financial product, RWA has not yet established its price discovery mechanism and investor closed loop. Therefore, we would like to hear your insights.In your view, which aspects of Hong Kong’s current RWA framework most urgently require improvement? Or what improvements are currently being advanced?
Attorney Liu Honglin:You are correct. Models such as those adopted by Ant Group and Longshine, which tokenize high-quality mainland assets on-chain and introduce overseas capital, represent a highly promising direction.However, to achieve genuine market-oriented adoption, I believe two critical issues must be addressed:
First is the issue of cost.In early real-world assets (RWA) projects, costs could account for 7%–8% of the financing amount, with a single financing transaction often requiring expenditures of several million RMB, including technology fees, compliance fees, and various channel fees. Although costs have decreased as the market has matured, they still range between RMB 3 million and RMB 5 million.This financing threshold is too high for the vast majority of small and medium-sized enterprises (SMEs) and lacks commercial viability.If RWA is to become a high-quality financing vehicle and an innovative solution capable of boosting secondary-market equities, I believe that future single-issuance costs must be reduced to below RMB 500,000–1,000,000, making them affordable for more enterprises. This will require service providers across all segments to achieve economies of scale and provide more systematic solutions.
Second is the liquidity issue we just mentioned.If token holders of RWA remain confined to niche groups such as traditional private funds and accredited investors,and lack secondary-market trading channels, their market appeal and audience reach will be extremely limited.Therefore, I believe that RWA will inevitably move toward exchanges—whether compliant exchanges or offshore markets—and effective trading mechanisms will necessarily be established. Only in this way can more early-stage investors and institutions be attracted to participate.
Thus, we believe that in the coming period, as financing structures and costs decrease and secondary-market liquidity improves, RWA will gradually become more widespread and cost-effective, akin to traditional equity financing.These are my views on our industry.
Moderator:I strongly agree with Honglin’s perspective. Therefore, to promote or advocate for the issuance and subscription trading of future on-chain assets, the key lies in enhancing circulation efficiency and reducing issuance costs.If, on top of traditional financial intermediary services, an additional layer of on-chain service fees is merely superimposed, this logic is unsustainable. However, we also understand that in the early stages, regulators, in order to protect the market, tend to allow only a few institutions capable of identifying risks to participate first; yet this indeed presents a dilemma. The cost of entry for institutions is high, and given that they already have numerous high-quality investment options, they may not necessarily be willing to venture into on-chain assets.In the Web3 era, how can Mankun Law Firm achieve rapid expansion?
Moderator:
Today, I visited a digital asset trading platform currently in preparation in Hong Kong. Their team already exceeds 300 members, highlighting the urgent market demand for talent.Speaking of which, I would also like to ask Honglin: Your law firm has expanded so rapidly—
how did you manage to find more than 50 like-minded lawyers who are proficient in both law and Web3?This must have been quite challenging, correct?Attorney Liu Honglin:
Attorney Liu Honglin:Indeed, it is not easy to find like-minded partners in this industry, which also demonstrates that there is indeed a shortage of talented professionals. I believe that the examinations launched by the Hong Kong Registered Digital Asset Analysts Association are very helpful for everyone to systematically learn industry knowledge. From an employer's perspective, we place particular emphasis oncandidates' understanding of the industry, but the concept of being "industry-savvy" is difficult to quantify. If an applicant has participated in Uweb courses or similar examinations, it at least indicates that they possess foundational knowledge, providing us with a useful benchmark for evaluation.
Regarding recruitment, we primarily rely on two channels:
First, seeking experienced talent from Web3 institutions.Approximately one-third of our lawyers, including partners, previously handled compliance and legal affairs for public chains, crypto funds, or exchanges. These colleagues have gained practical experience in the industry. When they wish to transition from in-house roles andcontinue working in the Web3 sector, Mankun Law Firm can provide an excellent platform.I have observed an interesting phenomenon: once someone has worked at a Web3 company, they often find it difficult to return to the Web2 workplace or institutions, preferring instead to continue deepening their expertise within the Web3 industry.
Second, cultivating new talent.We focus on training individuals with little to no prior experience. For instance, we will open numerousinternship positions for students graduating in June next year, including roles in legal research, brand operations, and paralegal support. We have campus recruitment plans in Shanghai, Hangzhou, Shenzhen, and Hong Kong, aiming to identify young people interested in the Web3 industry and provide them with systematic training from the ground up.
These are currently our two primary recruitment approaches.
What are the legal risks for mainland China-listed companies participating in the issuance of real-world assets (RWA)?
Moderator:Thank you for your insights. We also hope to leverage the platform of the Society to help more friends connect with outstanding institutions such as Mankun Law Firm.
I would like to ask Attorney Honglin one final question from the audience.In the RWA cases you have handled or based on your observations, are there any cases where issuance has already commenced, but legal risks or defects still persist?This would help raise everyone’s awareness of legal risk prevention.
Attorney Liu Honglin:Indeed, there are many cases worth sharing. Given that most of today’s attendees are from mainland China, I will focus on the issues of greatest concern to you.
If your background is that of a mainland China-listed company, it is regrettable to note that the optimal timing for participating in RWA has passed. Both the China Securities Regulatory Commission (CSRC) and other relevant regulatory authorities have been tightening policies; mainland securities firms are prohibited from participating in RWA issuances, and public activities are also restricted. Therefore, if a mainland China-listed company still wishes to proceed with RWA, it may need tobase its efforts on genuine business operations; otherwise, it may easily face regulatory inquiries from the CSRC.This is a situation that our clients have already encountered.
If one still wishes to attempt this, I believe that whether it involves RWA or NFTs, the ultimate goal is to address the enterprise’s growth challenges. From the perspective of assets and liabilities, corporate funding sources are essentially twofold: one from shareholders or investors, and the other from users or customers. In mainland China, attempting to directly link tokens with securities or equity interests presents significant difficulties.Accordingly, we recommend that enterprises give greater consideration to integrating blockchain concepts with user payment mechanisms and user activation initiatives, which may represent a more viable pathway. In other words,if there is a strong desire to pilot such initiatives within mainland China, the only feasible approach, in our view, is to avoid excessive financialization by maintaining sufficient distance from corporate equity interests, securities, and project profit distributions, and instead focusing more on membership-based marketing, prepaid top-ups, or pre-purchase models.
Naturally, some may ask:How can project profits or distributions be linked to users?
Our advice to clients is as follows:Structure these arrangements from the perspective of marketing expenditures.It is not necessary to make comprehensive commitments in advance; instead, duringthe course of operations or thereaftera portion of the budget may be allocated to sustain user activation efforts, subsidies, or rewards. However, ifin advanceexcessive promises are made, it is easy to fall intoIllegal fundraising or other financial risksThis is also an issue that many of our friends and acquaintances have encountered. The market changes rapidly; overly optimistic expectations do not necessarily yield ideal outcomes.
These are the recommendations we propose in light of practices in mainland China.
Moderator:Well, as Honglin just mentioned, the China Securities Regulatory Commission (CSRC) has indeed issued certain window guidance to securities firms in mainland China, and the real-world assets (RWA) market appears to have cooled somewhat. However, if we look back at the second half of 2024, including the initial issuance by Ant Group and Longshine, as well as subsequent projects that were finalized only after prolonged communications, we will find that:Early entry itself requires sufficient understanding of and confidence in the industry’s prospects.
We consistently believe that if enterprises truly incorporate RWA into their strategy, whether for financing or business innovation, they must possess greater insight and patience. As Honglin also pointed out, the compliance framework is gradually becoming clearer and may even become more open in the future. If all pathways were blocked and the market unable to develop, this would clearly not be the outcome regulators desire. I would like to say to all partners paying attention to this industry, including issuers, enterprises, and listed companies that hope to participate in issuances:Keep learning and stay engaged.When the opportunity truly arises, only those who have thought ahead and prepared in advance will be able to seize it.
Finally, sincere thanks to our audience for spending this hour with us! If you are interested in follow-up policies and cases related to RWA, please scan the QR code to follow us. See you next time!
