The early fervor surrounding the notion that “everything can be tokenized as real-world assets (RWA)” will inevitably subside, as asset issuance accelerates its concentration among high-quality credit institutions.

Introduction: What Are Real-World Assets (RWA)?

Real-world assets (RWA), referring to the on-chain representation of assets from the physical world, denote the process by which tangible or intangible assets in the real world are digitally mapped using blockchain technology and converted into tokens that can be issued, traded, and managed on-chain.

If Tether (USDT) is considered “on-chain U.S. dollars,” then RWA involves the tokenization of any asset with clear ownership, definable rights, and measurable value. This concept gained prominence after 2022 against the backdrop of rising global interest rates and declining yields within the crypto asset market. In 2023, with the entry of major asset management giants such as BlackRock and the clarification of regulatory frameworks, RWA officially entered its “year one” of development.

From a technical perspective, the tokenization of RWA encompasses three key stages:

  • Off-chain Rights Confirmation:Completing the confirmation of asset ownership, valuation, and compliance review through legal procedures, thereby establishing the foundation of trust;
  • On-chain Mapping:Mapping the confirmed asset rights and data onto the blockchain via smart contracts, linking them to tokens that represent ownership or income rights;
  • On-chain Governance:Relying on smart contracts to automate the execution of management functions such as income distribution and transfer restrictions, thereby enhancing efficiency and transparency.

RWA does not create trust out of thin air; rather, it explores ways to migrate and extend the existing creditworthiness of assets in the real world to the global blockchain network at lower costs and higher efficiency. Meanwhile, the “RWA Industry Development Research Report · Industry Section 2025” also explicitly points out thatThe notion that “everything can be tokenized as real-world assets (RWA)” is overly idealistic; not all assets are suitable for on-chain tokenization.

In fact, the success or failure of a project largely depends on asset selection at the initial stage, the development stage of RWA, and the understanding and awareness of RWA.Among these factors, selecting the right assets is the cornerstone of success, yielding twice the result with half the effort.

This article explores how to screen real-world assets suitable for tokenization, analyzes the common characteristics and typical cases of high-quality RWA assets, and identifies types of risky assets that should be avoided.

 

Macro Criteria: Five Common Characteristics of High-Quality RWA Assets

Tokenization does not alter the essential nature of an asset. The Securities and Futures Commission of Hong Kong (SFC) has explicitly stated that tokenizing real-world assets does not change their legal attributes. If the underlying asset constitutes a security, it remains classified as a security after tokenization and must comply with existing securities regulations. In other words, a “tokenized security” is essentially a traditional regulated security wrapped in digital technology: the underlying asset is subject to regulation under securities laws, while the on-chain token layer must meet additional compliance requirements regarding technical risks.

Given the regulatory adherence to the“substance over form”principle (Same Business, Same Risks, Same Rules), an ideal underlying asset for RWA typically possesses the following five common characteristics:

  • Clear Ownership and Lawful Transferability:The ownership or income rights of the asset must be clearly defined and legally permissible for transfer and trading.
  • Stable and Predictable Cash Flow:The assets are capable of generating continuous cash flows, such as interest, rent, and infrastructure fees. This stands in sharp contrast to assets like "metaverse land" that lack stable cash flows.
  • Robust governance and information disclosure mechanisms:Possession of mature and transparent management and information disclosure processes facilitates ongoing operations and oversight after on-chain integration.
  • Economic structure suitable for tokenization:The value and rights associated with the assets can be clearly quantified and encapsulated into appropriate structures, facilitating their minting into standardized tokens for a broader investor base.
  • Simple and transparent product structure:Assets with simple structures, easily assessable risks, and sufficient collateral are more likely to obtain regulatory approval.

 

Micro-level Practices: Exemplary Real-World Assets (RWA) Meeting High-Quality Standards

Under the screening of the aforementioned macro-level criteria, the following categories of assets have demonstrated outstanding performance in current real-world assets (RWA) practices.

(1) Fixed-income assets

These assets are highly standardized and generate stable cash flows, making them the most natural underlying assets for real-world assets (RWA). Among them, U.S. Treasury bonds are particularly prominent due to their default-free status and high liquidity. In addition to U.S. Treasuries, sovereign and corporate bonds from Europe and Asia are gradually being explored for on-chain integration, typically by issuing tokenized notes through structures such as British Virgin Islands (BVI) funds or Luxembourg SICAVs.

Participants in this sector include both traditional financial giants such as BlackRock and crypto-native institutions such as Ondo Finance. These entities generally place significant emphasis on compliance, often holding the underlying assets through special purpose vehicles (SPVs) or regulated funds to ensure that token holders' rights are firmly protected under law.

Representative Cases:

  • BlackRock USD Treasury Bill Token BUIDL:Launched on Ethereum in March 2024, it provides qualified investors with an on-chain channel for investing in U.S. Treasury bills. Holders automatically accrue interest on a daily basis, marking a substantive embrace of real-world assets (RWA) by traditional finance.
  • Tokenization of Green Bonds by the Hong Kong Special Administrative Region Government:In 2023, it issued HK$800 million in tokenized green bonds, allowing institutional investors to participate in repurchase operations with a 90% pledge ratio, thereby enhancing capital efficiency.

(2) Accounts Receivable and Franchise Rights

Such assets are based on genuine trade contracts or government authorizations, featuring clear title confirmation and stable cash flows, making them ideal underlying assets in the field of supply chain finance.

The core model is“Blockchain + Supply Chain Finance”Core enterprises record their accounts payable on the blockchain, enabling credit to penetrate seamlessly to multi-tier suppliers, thereby addressing the difficulties and high costs of financing faced by small and medium-sized suppliers at the end of the chain.

Representative Cases:

  • Centrifuge On-Chain Credit Matching:As an on-chain credit platform, Centrifuge tokenizes debt instruments such as accounts receivable, connecting lenders and borrowing enterprises through smart contracts. This simplifies financing processes, reduces financing costs, provides small and medium-sized enterprises with more convenient access to financing, and creates yield opportunities for lenders.

(3) Quantifiable rights to proceeds from infrastructure assets

Such assets include toll roads, photovoltaic power stations, and 5G towers. They often have government backing, generate extremely stable cash flows, and serve as a "ballast" for the social economy.

Typical cases:

  • Tokenization of rights to proceeds from GCL Energy Technology’s photovoltaic power stations (December 2024):The rights to proceeds from an 82 MW photovoltaic power station were tokenized, with real-time verification of power generation data through IoT devices and oracles.
  • Tokenization of rights to proceeds from Longshine Group’s charging piles (May 2025):The rights to proceeds from thousands of charging piles were tokenized. This project marks the first cross-border real-world assets (RWA) case involving mainland China’s new energy assets in the Hong Kong Monetary Authority’s Ensemble sandbox.

(4) High-value physical assets

Such assets include rare metals, which have potential for value storage and appreciation but suffer from insufficient liquidity in traditional markets. RWA unlocks their liquidity by addressing four major challenges: confirmation of rights, authenticity verification, custody, and trading.

As the regulatory framework improves, and upon meeting stringent verification and storage requirements,precious metalshave become acceptable underlying assets for real-world assets (RWA).

Typical cases:

  • PAXG：Gold-backed stablecoins issued by Paxos, where each token corresponds to a specific quantity of physical gold.

 

Cautionary guidance: Which assets should be avoided?

While selecting high-quality RWA, investors must clearly recognize the associated risks and prohibited areas.

From a legal perspective, relevant domestic regulations have expressly provided:

  • Notice on Preventing Bitcoin Risks (Yin Fa [2013] No. 289): defines certain coins as “specific virtual commodities” and prohibits financial institutions from engaging in businesses related to virtual currencies. If an RWA token is anchored to virtual currencies rather than real assets, this regulatory instrument will apply directly;
  • Announcement on Preventing Risks of Token Issuance and Financing (September 4, 2017): clarifies that token financing is inherently “illegal public fundraising,” and strictly prohibits disguised initial coin offerings (ICOs) through methods such as fractionalizing shares or lowering investment thresholds;
  • Notice on Further Preventing and Disposing of Risks Related to Virtual Currency Trading and Speculation (September 15, 2021, the “September 24 Notice”): expressly categorizes virtual currency-related activities as “illegal financial activities,” while distinguishing the fundamental differences between RWA and “air coins”—projects that are anchored solely to real assets and do not engage in token speculation meet the prerequisites for compliance;
  • Securities Law (2019 Revision): Article 2 expressly provides that “securities include stocks, corporate bonds, depository receipts, and other securities recognized by the State Council in accordance with law.” If an RWA token features “promises of yield rights + transferability” (such as agreed pro-rata dividends or support for secondary market trading), it may be deemed “other securities” and must comply with the full-process compliance requirements for securities issuance and trading.

From the perspective of asset types, the following categories still warrant heightened caution:

  • Virtual currency derivatives:For example, Bitcoin and Ethereum futures contracts are inherently highly volatile. Moreover, in jurisdictions such as Hong Kong, regulators have explicitly prohibited the tokenization of pure crypto assets, including Bitcoin and Ethereum.
  • Purely conceptual projects without underlying asset support:Examples include “unopened pearl oysters” and “high-imitation jadeite,” which are highly likely to be characterized as illegal fundraising or fraud;
  • Items whose circulation is expressly prohibited by law, as well as certain items with restricted circulation:Examples include cultural relics, narcotics, ivory, rhinoceros hornbill products, uncut jadeite rough stones, and items with restricted circulation that require special franchising or licensing (such as land-use rights for collectively owned construction land);
  • Others:Assets lacking clear legal ownership or with highly uncertain cash flows.

 

Conclusion: Asset Selection and Compliance First

The early hype around the notion that “everything can be tokenized as real-world assets (RWA)” will inevitably fade, and asset issuance is accelerating its concentration among high-quality credit institutions. In this context, the key to building high-quality RWA projects lies not only in prudent asset selection but also in strict compliance with legal requirements. If you are strategizing in this area, the Mankun Law Firm team can provide professional compliance support to help you expand steadily and securely.