Written by: Shao Jiayi, Liu Honglin; Mankiw

What the Web3 community lacks the most in 2025 is “trends”. After DeFi, NFT, Metaverse, and meme, RWA suddenly became the top trend - the screen is full of slogans such as “asset chain reconstruction of the financial system” and “trillion-dollar market new blue ocean”. Various RWA industry associations, summits, alliances, and forums are like cancer cells, and there are dozens of times more RWA projects that have actually landed. Even the old man selling pancakes at the entrance of the village has heard that “putting houses on the chain can sell them globally”, but I’m sorry, I have to pour a basin of cold water on you today: when you follow the slogan “RWA asset chain”, you may not even understand what you are talking about.

Let’s break the first myth: RWA is not a “new species”, it’s just “old money in a different ledger”

Don’t be fooled by the packaging of “Web3 innovation”. The funds you buy on Alipay, the A shares in the stock software, and the bonds in the bank APP are essentially “real asset tokenization” - stocks are digital certificates of equity, funds are share certificates of asset portfolios, and bonds are electronic records of debts. The only difference is that the tokens of traditional finance exist in the centralized databases of banks and securities companies, while the tokens of RWA exist in the decentralized ledgers of the blockchain. It’s like changing the ledger from Excel to Google Docs. The core is still bookkeeping, but the way of bookkeeping has changed.

But now many people are talking about this as if it was "the first time humans discovered fire": "Wow! Blockchain puts assets on the chain!" Come on, stocks have realized "asset tokenization" as early as the 17th century, but at that time, paper certificates were used, and later they became electronic data. RWA is essentially "Tokenization 2.0", which moves the certificate from the centralized database to the chain, adding the characteristics of non-tamperability and decentralized verification, but the underlying logic is still "using digital certificates to represent rights and interests."

Let's take a straightforward example: if you buy Tencent's stock, the broker's APP shows that you hold 100 shares. These 100 shares are the tokens of Tencent's equity and are stored in the broker's database; if Tencent issues RWA equity, you receive 100 tokens on the blockchain, which essentially still represent these 100 shares. The difference is that this token can be circulated on the chain, while traditional stocks can only be transferred on the exchange. So don't myth about RWA, it is not "creating new assets", but "changing the old assets to a cooler ledger."

90% of people have missed the point: the essence of RWA is not "data on chain", nor "asset on chain", but "equity certificate on chain"

Now the streets are full of nonsense that "data on chain = assets on chain". Some people say: "I scanned the real estate certificate into PDF and uploaded it to the chain, and the house became RWA!" Wake up, even if you take 100 photos of the real estate certificate and upload it to the blockchain, the house is still registered in the system of the Housing Authority, and it has nothing to do with the data on the chain. Data is just information, and the core of assets is "rights" - you own the house not because you have a photo of the real estate certificate, but because your name is written in the registration book of the Housing Authority, which is a right granted by law.

Some people even boasted: "Our Tokens are mapped to real assets 1:1, and holding Tokens is equivalent to owning assets!" How is this different from a child playing house? You draw a "million tokens" and say it represents the convenience store downstairs. Does that mean the convenience store belongs to you? "Mapping" without legal endorsement is a castle in the air. The core of RWA is not to move the assets themselves to the chain (houses cannot be moved, and equity cannot be moved), but to tokenize "equity certificates that prove you own assets" - for example, converting legally recognized equity certificates such as stocks, bonds, and property rights certificates into tokens on the chain.

Key points: The essence of assets is "rights", and the carrier of rights is "legally recognized certificates". Movable property relies on contracts and invoices, immovable property relies on property certificates, equity relies on shareholder registers, and creditor's rights rely on debt contracts. What RWA needs to do is to repackage these "legally protected certificates" with blockchain technology to make the circulation of certificates more efficient and transparent, but the premise is: first there are rights under the legal framework, and then there are tokens on the chain. If you skip the law and directly talk about "asset chain", it is pure hooliganism.

Don’t treat “on-chain” as the Holy Grail: Without legal support, RWA is the “Emperor’s New Clothes”

The blockchain community likes to say "code is law", but in the RWA field, law is the father of code. If you hold a Bitcoin private key, you own 100% of Bitcoin, because the "rights" of Bitcoin are completely defined by the blockchain code; but RWA's Token represents real assets, and the ownership of real assets is determined by the laws of various countries. For example, if you buy an RWA Token representing a US property, and the developer runs away, you cannot take the private key to the US court to sue - the US court must first look at: Is this token recognized as a legal equity certificate under the local legal framework? Do you meet the "qualified investor" status stipulated by the United States? Does your purchase process comply with US securities regulations?

Let’s take a more heartbreaking example: someone in China put a house in Beijing “on the chain” and issued 1,000 tokens, each of which represents 0.1% of the property rights.

However, according to Chinese law, changes in property ownership must be registered at the Real Estate Registration Center, and the transfer of tokens on the chain does not count at all. If the homeowner sells the house one day and the token holder goes to court to defend his rights, the court will only look at the property certificate, not the records on the blockchain - because the law does not recognize the legitimacy of this "on-chain equity certificate".

Therefore, the core of RWA is not a technical issue, but a legal construction issue: How to make the token on the chain a recognized equity certificate in the real legal system? This requires solving three key problems:

1. Rights anchoring: Tokens must correspond to real rights protected by law (such as equity, debt, and property rights), not just empty words.

2. Compliance framework: The issuance process must comply with the regulatory requirements of the target market (such as SEC regulations in the United States and financial regulation in Hong Kong, China), otherwise it will be an illegal issuance of securities.

3. Dispute Resolution: When disputes arise regarding the rights represented by tokens, can the legal system recognize on-chain records as evidence and protect the rights of holders?

Those who talk about RWA without considering the law are either ignorant of the rules or liars who pretend to be ignorant. After all, the slogan of "decentralization and global circulation" sounds much better than "dealing with the supervision of various countries first."

RWA is essentially a financial product. Don’t be fooled by “decentralization”

Many people have touted RWA as a "magic tool that will revolutionize finance," saying it will allow ordinary people to invest in overseas real estate, top private equity, and artworks. But the truth is: RWA is the tokenization of financial instruments, and finance is inherently regional and shackled by regulation.

First of all, all RWAs are "financial products". Whether it is mortgage bonds, corporate accounts receivable, or fund shares, they are essentially tools for "making money with money" and must comply with the core logic of financial supervision: protecting investors, preventing risks, and maintaining market stability. For example, the United States stipulates that investors who purchase RWA securities must be "qualified investors", while China requires that financial products must be approved and must not illegally raise funds from the public. Projects that claim that "anyone can buy RWA" are either engaging in illegal fundraising or playing the dangerous game of "regulatory arbitrage".

Secondly, the regional nature of finance determines that RWA is difficult to "circulate globally". The real estate RWA token you issued in the United States may be regarded as "foreign securities" in China and cannot be sold to Chinese investors without approval; similarly, Chinese corporate debt RWA may not be purchased by American investors due to regulatory restrictions. Even if global circulation is technically achieved, legal recognition is still a huge obstacle - can you imagine a Chinese investor holding a chain token and suing a defaulting American company in a US court? Not to mention the cost of cross-border litigation, the question of "whether the US court recognizes the legitimacy of your holding of the token" is a big problem.

More realistically, financial risks will not disappear just because they are “on the chain”. Credit risk, market risk, and liquidity risk in traditional finance still exist in RWA, and may even become more hidden due to “decentralization”. For example, if an RWA project issues tokens with fake assets as collateral, the immutable nature of the chain will make it more difficult to expose the scam - after all, the data is real, but the assets are fake.

Beware of the "RWA bubble": 99% of the discussion is just empty talk, and implementation is difficult in the "last mile"

The current RWA circle is very similar to the ICO boom in 2017: various white papers are flying everywhere, there are more intermediaries than implementation cases, and there are more industry associations than project parties. However, there are very few RWA cases that can really be compliant and operational. Why? Because the implementation of RWA requires crossing three "gates of hell":

First level: Legal compliance

This is the most difficult hurdle. Taking the United States as an example, the SEC considers most RWAs as "securities" and must comply with the Securities Act, complete registration or obtain exemptions, otherwise it is illegal. This means that the project party needs to hire a top team of lawyers, spend millions of dollars to complete legal documents, and pass the review of regulatory agencies. China is more stringent. Any behavior involving "asset securitization" and "financial product issuance" must be approved by the financial regulatory authorities. Unauthorized issuance may be suspected of illegally absorbing public deposits.

The second level: asset penetration

In order for RWA to gain the trust of investors, it must solve the problem of "asset authenticity". For example, for a real estate RWA, does the token on the chain really correspond to a real estate? Is the property right clear? Is there any mortgage? This requires professional asset evaluation, due diligence, and legal confirmation of ownership, rather than relying on the "automatic execution of smart contracts" in the white paper. Many projects claim that "on-chain means confirmation of ownership", but in reality, real estate title confirmation requires a lot of running around, and blockchain only records the results and cannot replace offline legal procedures.

The third level: investor protection

Traditional finance has a mature investor protection mechanism, such as CSRC supervision, bank custody, risk warnings, etc. But what about RWA? Under a decentralized architecture, who will supervise the project? Who will protect investors' right to know and right to redeem? If the token price plummets, can investors redeem it like buying a fund? If the underlying assets are fake, do investors have channels to protect their rights? If these problems are not solved, RWA will always be just a "castle in the air".

What’s even more ironic is that many RWA projects are now playing tricks to circumvent regulation: for example, placing the issuer in the Cayman Islands, using the name of “decentralized autonomous organization (DAO)” to circumvent legal responsibility, and claiming that they are “not subject to regulation by any country.” But the reality is that as long as you target investors in a specific country, you must abide by local laws—DAO is not a lawless place, and Token is not a “get out of jail free gold medal.”

The future of RWA: tear off the "myth" label and return to the essence of "tool"

Having said so many "disappointing" words, I do not deny the value of RWA. On the contrary, RWA does have great potential: it can improve the efficiency of asset circulation, reduce financing costs, and allow niche assets to obtain liquidity, such as art shares, real estate investment trusts (REITs), corporate accounts receivable, etc. But the premise is: remove the filter of "blockchain is omnipotent" and honestly solve the core issues of law, supervision, and compliance.

The future RWA should be like this:

Compliance first: Issue under a specific legal framework, such as the US Reg D private placement exemption and China’s asset securitization pilot program, first become a “legal financial instrument” before discussing “chain innovation”.

Technical assistance: Blockchain is used to improve the efficiency of certificate circulation and enhance transparency, rather than subvert the legal system. For example, smart contracts can be used to automatically execute dividends and on-chain data can be used for real-time regulatory compliance review.

Focus on vertical scenarios: Start with standardized assets, such as funds, bonds, commercial paper, and REITs. These assets have clear legal relationships, mature regulatory frameworks, and are easier to implement. Instead of starting with highly complex and high-regulatory risk areas such as "real estate fragmentation" and "artwork splitting".

Most importantly, investors need to be clear: RWA is not a magic weapon for "making money without doing anything", but a more efficient financial tool that also requires risk assessment, legal review, and compliant investment. Projects that are packaged as "asset chain, global circulation" are either ignorant leeks or scammers who want to cut leeks - real RWA players are quietly dealing with regulators in various countries, rather than shouting slogans on social media.

Conclusion: Don’t be confused by “on-chain”, see the essence of RWA

Back to the original question: What are we talking about when we talk about RWA assets on the chain? It is not a technical gimmick of data on the chain, nor a utopia of global asset circulation, but a compliance revolution of "reconstructing the equity certificate system with blockchain technology". The core of this revolution is not technology, but law; not decentralization, but regulatory compatibility; not creating new assets, but making old assets circulate more efficiently.

Those who talk about RWA without considering the law are like building a high-rise on the beach; those who ignore regulation and talk about global circulation are like walking through a powder keg with a torch. The true value of RWA lies in the compliance documents of each jurisdiction, in the mapping of rights between assets and tokens, and in the specific terms of investor protection - not in the beautiful words such as "disruption", "reconstruction" and "trillion-dollar market" in the white paper.

Next time someone tells you that “RWA assets on the blockchain will change the world”, you might as well ask them three questions:

1. In which country’s legal system is your token recognized as a legal right certificate?

2. How do you prove that the tokens on the chain really correspond to real assets, not just air?

3. If an asset defaults, as an investor, what legal channels can you use to protect your rights?

The answers lie in these three questions. The story of RWA has just begun, but only by tearing off the packaging of the "myth" can we see the real value - or the bubble.