jakiro
Author: Zhang Feng
According to Reuters on Monday (September 22), citing two people familiar with the matter, the China Securities Regulatory Commission (CSRC) has recently issued “informal guidance” to some mainland securities companies, requiring them to suspend their tokenization business related to physical assets (RWA, Real World Asset) in Hong Kong.This trend is interpreted as the latest signal that Beijing is cautious about the overseas digital asset boom.
This news cannot be confirmed yet, but it has undoubtedly attracted widespread attention from the market.Assuming this news is true, we believe that it seems to be a change in regulatory direction on the surface, but in fact it is a re-understanding of the nature of RWA business.This “informal guidance” should not be simply interpreted as a suppression of innovation, but rather a cautious statement by regulators on risk management in a complex international financial environment.
1. The legal gray area of RWA business
The actual breakthrough of the legal framework in the tokenization of physical assets is no longer a secret.
Asset rights confirmation process,The process of converting physical assets into on-chain tokens involves the issue of legal connection between property rights.my country’s property rights law system is based on physical assets, and the definition of the nature of the tokenized assets is still unclear. This blurred legal attributes lays hidden dangers for subsequent operations.
There are also challenges in the value assessment process.Traditional asset valuation methods are difficult to adapt to the characteristics of global transactions after tokenization 7×24 hours, and the balance between valuation frequency and accuracy is difficult to grasp.
There are many cross-border regulatory issues such as foreign exchange taxation.The issue of cross-border data compliance is particularly prominent. Tokenized asset transactions naturally have cross-border attributes. my country’s “Cybersecurity Law” and “Data Security Law” have strict restrictions on the exit of financial data. The conflict between the two requires innovative solutions.
RWA business may bypass existing foreign exchange control measures and realize substantial cross-border flows of assets through tokenization, which is in tension with the current capital project control policy.The cross-border taxation issue is also complex. The lack of rules such as tax jurisdiction and taxation time for cross-border transactions of digital assets may lead to tax loss.
In addition, the cross-border financial regulatory coordination mechanism is insufficient.RWA business involves multiple jurisdictions, and the regulatory cooperation framework is still aimed at traditional financial services, and the regulatory coordination of new digital asset businesses is still in the exploration stage.In this context, the cautious attitude of the regulatory authorities is reasonable and logical.
2. The essence behind “stop”
As for the mainland, RWA business has always been on a relatively marginal area of law.my country has not yet issued laws and regulations specifically to regulate the tokenization of digital assets, and existing operations are mostly based on the expanded interpretation of the current laws.The integration of laws and regulations between the Mainland and Hong Kong by securities companies is essentially looking for a living space in the gap between the law.
From a legal perspective, this “stop” has no substantial direction, because the mainland has not clearly stipulated the relevant regulations on promoting the development of RWA business.The related businesses previously carried out by securities companies are based on the demonstration influence of previous cases such as Langxin Technology.This logic of “no law prohibition” does not apply completely in the financial field, because not every RWA business is similar to a sandbox project, especially businesses involving cross-border capital flows and systemic risks.
The “informal guidance” of regulators should be understood as risk warning rather than policy shifts.It reminds market participants of the legal and policy risks that excessive innovation can bring in the absence of a clear rule framework.This reminder helps prevent the market from forming wrong expectations and avoid the introduction of “one-size-fits-all” supervision.
It is worth noting that this guidance targets RWA business “in Hong Kong”, indicating that regulatory concerns are no longer limited to domestic business, and have begun to pay attention to the potential risk transmission of overseas activities of Chinese financial institutions.This expansion of cross-border regulatory vision is in line with my country’s policy orientation of paying equal attention to financial opening and risk prevention and control.
3. Get out of the misunderstanding of “regulatory arbitrage”
In the process of RWA business development, the market has gradually formed a misunderstanding of “regulatory acquiescence” or even “regulatory liberalization”.Some practitioners believe that as long as the technology is feasible and the market has demand, the business can be carried out, and the regulatory attitude will gradually move from tolerance to recognition.This misunderstanding stems from a one-sided understanding of the relationship between financial innovation and regulation.
Financial supervision and innovation have always been a dialectical unified relationship.It is normal for regulation to lag behind innovation, but this does not mean that regulation will unconditionally recognize all innovations.The bottom line of regulation is to prevent systemic risks and maintain financial stability.Any innovation that may endanger this bottom line will eventually be regulated.
This regulatory statement clarifies this misunderstanding, indicating that some “regulatory arbitrage” thinking that breaks through the bottom line is unsustainable.If the RWA business wants to develop healthily, it must put compliance at the core from the initial stage, rather than remediation afterwards.This requires practitioners to consider not only technical feasibility and business value, but also to fully evaluate compliance costs and regulatory attitudes.
In the future, the development of RWA business will emphasize “substantially over form”.Even if certain regulatory requirements are circumvented through technical means or cross-border arrangements, corresponding supervision must be accepted as long as the business is essentially involved in financial activities.This regulatory principle helps prevent regulatory arbitrage and promote fair competition in the market.
4. Going towards the future of compliance development
The trend of digital tokenization is indeed inevitable.Blockchain technology has created huge space for the improvement of asset liquidity, and major financial markets around the world are actively exploring related applications.However, the irreversible technological trend does not mean that all technological applications are worthy of praise. The key is how to control risks while grasping the trend.
Adhering to value orientation is the prerequisite for the healthy development of RWA business.Tokenization should serve to improve the efficiency of the real economy, rather than create speculative tools.In project selection, high-quality assets that really need to solve liquidity problems through tokenization should be given priority, so as to avoid creating a trading market for assets that lack actual value.
Legal and compliant operations are the basis for the steady and long-term development of RWA business.This requires practitioners to actively communicate with regulators and actively participate in rule formulation rather than evading regulation.Compliance considerations are introduced in the early stages of business design to ensure that the business model is consistent with regulatory principles, rather than post-remediation.
Specifically, RWA business should focus on the following compliance priorities: First, customer suitability management, ensuring that only qualified investors participate in related transactions; Second, information disclosure is transparent, fully revealing asset risks and token structure to investors; Third, risk isolation is required to prevent tokenized risks from being transmitted to the traditional financial system; Fourth, cross-border regulatory cooperation, and proactively cooperating with regulatory requirements in different jurisdictions.
Supervision and innovation have never been an oppositional relationship, but a dynamic balance that promotes each other.The China Securities Regulatory Commission’s “informal guidance” this time should not be simply interpreted as a negation of RWA business, but rather a guidance on the healthy development direction of the industry.Under the irreversible trend of asset digitalization, only by putting risk prevention and control at the core of innovation can we realize the original intention of technology to empower finance and avoid repeating the mistakes of financial innovation being out of control in the past.
The prospects of RWA business are still broad, but the path may need to be adjusted continuously. Market participants should regard this regulatory statement as an opportunity to clarify misunderstandings and return to rationality, and jointly build a business model and regulatory framework that can not only give full play to its technological advantages but also effectively control risks.Only in this way can the tokenization of physical assets truly become a beneficial exploration of financial innovation, rather than the next risk explosion point.
