Systematic Interpretation of the New RWA Policy: Regulatory Framework and Implementation Details

Author: Lucas Gui

Last Friday evening, eight government departments jointly issued the “Notice on Further Preventing and Managing Risks Related to Virtual Currencies and Other Assets” (hereinafter referred to as the “Notice”).

On the same day, the China Securities Regulatory Commission (CSRC) released the “Guidelines on the Regulation of Asset-Backed Securities Tokens Issued Domestically and Abroad” (hereinafter referred to as the “Guidelines”).

Some say this marks the dawn of RWA (Real-World Asset) regulation in China, with the country officially opening a compliant pathway for RWA. But is that truly the case?

In this article, we will thoroughly analyze these two heavyweight documents—the Notice and the Guidelines—examining their core frameworks and regulatory approaches. Using a more rational and objective perspective, we aim to clarify the following key questions:

1. What are China’s regulatory attitudes toward virtual currencies and RWA? How have they changed compared to previous policies?

2. How does this new policy construct a compliant regulatory framework for RWA? What details are worth noting?

3. What are the challenges and potential obstacles in issuing RWA based on domestic assets? What practical issues might arise during implementation?

1 Overall Conclusions and Judgments

First, here is our overall assessment of this policy.

The Chinese government continues to pursue a strict stance against virtual currencies.

In contrast, this new policy explicitly opens a compliant pathway and provides regulatory guidance for issuing securities-backed RWA abroad. However, from the perspectives of underlying assets, issuers, and issuance activities, the compliance thresholds for RWA remain quite high.

Whether compliant RWA in China can truly explode depends on further refinement of detailed rules and the practical implementation of case studies.

2 The Dichotomy Between Virtual Currencies and RWA

Looking at both the Notice and the Guidelines, China’s government adopts a clear dichotomy in its regulation of virtual currencies:

— separating general virtual currencies from asset-backed tokens based on real-world assets (hereinafter “RWA tokens”), with distinctly different regulatory attitudes.

(Above is a schematic diagram illustrating China’s virtual currency regulation dichotomy.)

For general virtual currencies, the government maintains a strict crackdown and refuses to compromise.

Centered on the core positioning of “illegal financial activities,” regulations are further refined across several dimensions: financial institutions, intermediaries, technical service providers; internet content and access management; mining activities, and more.

In contrast, for RWA, this new regulation provides a clear definition and regulatory pathway. This is the first time RWA has been formally recognized within China’s regulatory context, which is highly significant.

“Tokenization of real-world assets refers to the use of cryptographic technology and distributed ledger or similar technology to convert ownership rights, income rights, and other interests into tokens (or similar tokens) or other rights and bonds with token-like features, and to issue and trade them.” — “Notice”

So, what exactly is the compliant pathway for RWA introduced by this new regulation? To answer this, we need to analyze the specific details within the documents to understand the regulatory framework more deeply.

3 RWA Compliance Pathways and Regulatory Framework

Based on the following diagram, we can systematically interpret the RWA regulatory framework conveyed by these two documents:

[Insert diagram here]

From the diagram, it’s clear that the core distinction in RWA regulation hinges on whether the underlying assets are issued domestically or abroad. These correspond to entirely different regulatory pathways.

If RWA tokens are issued domestically based on domestic assets, the overall regulatory stance can be summarized as “principle of prohibition + exceptions permitted.”

Principle of prohibition is not surprising, as China’s current regulations do not allow domestic token issuance. What is more noteworthy are the exceptions defined in the Notice—namely, “with the approval of the relevant regulatory authorities, relying on specific financial infrastructure.” However, these provisions are currently vague and lack sufficient detailed guidance.

The other regulatory pathway involves issuing RWA tokens abroad based on domestic assets. The Notice explicitly acknowledges the existence of such a compliant pathway but does not elaborate on specific details.

Meanwhile, the CSRC’s simultaneous release of the Guidelines provides more detailed disclosures regarding the compliant issuance of securities RWA tokens. Combining both documents offers a more comprehensive and multi-dimensional perspective.

In summary, the compliance standards for securities RWA can be analyzed from “three angles, two departments, and one principle.”

The “three angles” are the underlying assets, the issuer, and the issuance activities:

1. Underlying Assets:

• No significant ownership disputes, and transferable according to law
• No prohibited circumstances listed in the negative list for underlying assets of domestic asset securitization

2. Issuer:

• Capable of legally raising funds through capital markets
• Domestic entities or their controlling shareholders/actual controllers have no recent criminal convictions
• Not under legal investigation

3. Issuance Activities:

• Must strictly comply with laws on cross-border investment, foreign exchange, internet and data security
• Undergo national security review by relevant State Council departments
• Complete filing with the China Securities Regulatory Commission (CSRC)

The “two departments” refer to the core regulatory agencies— the State Council and the CSRC—responsible for national security review and filing registration, respectively.

The “one principle” is the clear adherence to the “same business, same risk, same rules” principle of transparent regulation.

Having established this theoretical framework, many readers may wonder about the practical challenges in implementing RWA under this regulation. What obstacles might arise in real-world application?

4 Practical Challenges and Key Details

First, regarding the compliance pathway for domestic RWA issuance, it is crucial to clarify the special licensing conditions mentioned earlier.

“Activities involving the tokenization of real-world assets within the territory… should be prohibited; except for those activities conducted with the approval of the relevant regulatory authorities and relying on specific financial infrastructure.” — “Notice”

Which specific agency or department is responsible for these approvals? What exactly constitutes “specific financial infrastructure”? These remain unclear at present.

Second, for offshore issuance of securities RWA tokens, several details require special attention:

1. The underlying assets must avoid the prohibitions listed in the “Negative List of Underlying Assets for Domestic Asset Securitization,” limiting the types of assets eligible for RWA issuance.

(Insert screenshot of the first item in the Negative List here)

2. Both the national security review by the State Council and the filing with the CSRC must be satisfied. The actual implementation depends on further guidance from regulatory authorities, making compliance challenging and uncertain.

3. Beyond the special compliance standards, basic cross-border investment and financing regulations—such as cross-border investment, data and network security, foreign exchange management—also impose significant compliance obligations on RWA issuers.

4. Offshore issuance of RWA will also involve complex regulatory coordination between China’s CSRC and foreign securities regulators.

All these issues await further clarification and detailed guidance from regulators. We will continue to monitor relevant policies and case studies to provide systematic and in-depth insights for our readers.