Hong Kong's Web3 New Chapter: RWA and Stablecoins Leading Financial Innovation

On the occasion of the 28th anniversary of Hong Kong's return, an online event focusing on Web3 and global financial innovation was successfully held. This event centered around the theme "RWA Revolution: Trillions of Assets On-Chain in Hong Kong," gathering industry experts to discuss the opportunities and challenges of tokenizing real-world assets (RWA).

RWA Promotes the Digital Transformation of Finance in Hong Kong

The Chief Strategy Officer of a trading platform analyzes from a macro perspective, pointing out that the implementation of stablecoin legislation in the United States and Hong Kong has triggered a wave of traditional finance and brokerage firms entering the virtual asset space, reflecting the trend of compliance and institutionalization of virtual assets. The U.S. strategically positions itself as "on-chain digital colonialism," reinforcing dollar hegemony through the distribution of stablecoins and U.S. Treasury bonds; Hong Kong positions itself as "on-chain trading hub," leveraging the advantages of "one country, two systems" to attract foreign investment as a window for mainland assets, and exploring non-U.S. dollar settlement solutions. Stablecoins and RWA respectively represent the mapping of the on-chain funding side and asset side, with Hong Kong promoting the internationalization of the RMB and the construction of an independent settlement network through RWA, occupying a unique position in global financial innovation.

Legal Compliance and Opportunities of RWA

The legal director of an investment management company pointed out that Hong Kong's attitude towards virtual assets has shifted from a "money laundering" misunderstanding to regulatory support since 2017. The three main legal concerns regarding RWA development include: traditional financial institutions prefer private chains to ensure compliance; custodial solutions need to be clearly defined to meet regulatory requirements; transaction records must meet the "gold standard" of off-chain traditional finance. Real estate RWA faces challenges due to off-chain registration requirements, but can circumvent restrictions through rent income securitization; bonds and funds are easier to approve due to standardization. The compliance of RWA depends on whether the underlying assets are regulated under the Securities and Futures Ordinance, with lower compliance thresholds for non-securities assets. The secondary market in Hong Kong has great potential, but lacks infrastructure; if Hong Kong's stablecoins can support the internationalization of the Renminbi after their launch, it will further expand the market.

Target User Group of RWA

The CEO of a certain RWA company believes that the success of RWA requires buying support, and its user base can be divided into two categories: 1. Crypto Native investors, who tend to allocate their returns to traditional assets through RWA while retaining their crypto form to avoid tax and regulatory complexities; 2. High-net-worth individuals from traditional finance, who are willing to allocate a small portion of funds to RWA to diversify risks and pursue potential high returns. This type of user may be encountering cryptocurrency for the first time, participating in RWA investments through stablecoins and wallets in Hong Kong. The Hong Kong RWA market can connect crypto with traditional finance, promote the tokenization of quality assets, and attract global funds.

The Role of Stablecoins in Promoting RWA and the Prospects of Tokenization in Hong Kong Stocks

A head of a Web3 education institution pointed out that the upcoming implementation of the "Stablecoin Regulation Ordinance" marks the world's first regulatory framework for fiat stablecoins, positioning stablecoins as payment settlement tools. Hong Kong can issue stablecoins in USD or HKD, but USD stablecoins are more attractive due to their strong liquidity. Stablecoins provide efficient cross-border payment support for RWA, which develops in three stages: currency tokenization (stablecoins), bond/commodity tokenization, and stock tokenization. The U.S. leads with the tokenization of U.S. stocks, while the tokenization of Hong Kong stocks is difficult to achieve due to the Hong Kong Stock Exchange's exclusivity. Hong Kong needs to accelerate innovation, explore REIT and ABS tokenization, and leverage the advantages of the one country, two systems policy to attract cross-border assets, but it must be wary of competitive pressure from the U.S.

The Significance of Stablecoin for Compliant Issuance of RWA

Some industry insiders believe that the Hong Kong stablecoin regulations promote the development of RWA from a regulatory and compliance perspective. From a regulatory standpoint, issuers need to obtain relevant licenses and establish local entities, and reserve assets must have high liquidity and be entrusted to licensed trustees to ensure transparency and security. In terms of compliance, stablecoins shorten the settlement cycle of RWA to seconds, cross-chain transactions are shielded from value fluctuation risks, and assets are verifiable and traceable, meeting central bank standards, which facilitates auditing and tax calculations. Stablecoins provide an efficient and transparent trading environment for RWA, promoting the issuance and circulation of digital assets.

The Role and Advantages of RWA in the Hong Kong Web3 Ecosystem

A senior practitioner holds a cautious attitude towards the concept of RWA, believing that it currently has many disadvantages, with a significant increase in fraud cases. However, he believes that RWA has certain significance when combined with real assets, especially under the background of Hong Kong's "one country, two systems" policy and recent regulatory legislation for virtual currencies, which has attracted many crypto projects and international resources. He pointed out that current regulations are still not transparent, and fraud issues are prominent, but this is also a period of opportunities for the industry. He suggested that if Hong Kong can take the lead in formulating a clear regulatory framework, it will attract more funds; otherwise, it may become a "follower."

The Role and Advantages of Hong Kong in Promoting RWA and Web3 Development

A senior person from a licensed institution believes that although Hong Kong has started slowly in regulatory legislation, it has shown positive progress through the stablecoin licensing system. Hong Kong's goal is to tokenize traditional financial assets and enhance trading efficiency and smoothness through blockchain technology, especially in the issuance of financial products in the primary market, along with the development of stablecoins, to open up international sales channels. The Hong Kong Securities and Futures Commission has provided compliance support for tokenized financial products based on the existing securities law framework, and it is expected that international transactions of domestic assets can be further facilitated through offshore Renminbi stablecoins in the future. Although issues such as regulation and liquidity still require time to resolve, through tokenization, Hong Kong can achieve diversification in the sales of financial products and enhance global competitiveness.

New Regulations on Stablecoins in Hong Kong and the RWA Track: Building a New Infrastructure for Global Payments

The new regulations for stablecoins in Hong Kong focus on 100% reserves and a clear licensing mechanism, significantly enhancing regulatory clarity and attracting traditional financial institutions. The new regulations reduce regulatory uncertainty, boost market confidence, and facilitate the expansion of cross-border payments, DeFi, and RWA markets, but high compliance costs limit the participation of small and medium-sized institutions. Hong Kong can leverage its advantage as a financial hub to attract banks and internet companies, but in the short term, it is constrained by market size and the dominance of USD stablecoins. Several giants have entered the regulatory sandbox, targeting the B2B e-commerce payment sector and challenging the traditional Swift system.

RWA and stablecoins complement each other, compliance and ecological diversification become key

New regulations for stablecoins are accelerating the RWA sector, with both complementing each other and laying the foundation for a new global payment infrastructure in Hong Kong. Stablecoins provide efficient settlement for RWA, shortening financing cycles, with the market expected to reach $16 trillion by 2030. RWA attracts off-market funds, and the entry of large institutions creates a snowball effect, while stablecoins lower compliance costs and enhance transaction feasibility. However, cross-border regulatory cooperation poses the greatest challenge, as the circulation of stablecoins on public chains must meet the law enforcement requirements of multiple countries. In future development, differentiated profit models, ecological diversification, and licensing competition will become key factors. Hong Kong needs to overcome technical and regulatory integration, leveraging the advantages of "one country, two systems" to create a new global financial ecosystem that integrates stablecoins and RWA.

Conclusion

Hong Kong, with its clear regulatory framework for stablecoins and the unique advantage of "one country, two systems", is attracting many giants to enter the market, targeting the trillion-level cross-border payment and asset tokenization market, challenging the dollar-dominated financial landscape. Stablecoins and RWA complement each other, injecting an efficient and transparent on-chain ecosystem into traditional finance, helping to internationalize the renminbi and facilitate global capital flow. However, high compliance costs, complex cross-border regulations, and the need for market cultivation cycles still need to be overcome. If Hong Kong can accelerate legislative innovation, improve infrastructure, and expand diversified application scenarios, it will transform from a "follower" to a "creator" in the Web3 wave, leading a new chapter in the global financial digital transformation and writing a magnificent blueprint for the future of the digital chain.