Giants Push Overseas Asset Tokenization, Prioritize Safety & Compliance

Following the participation of internet giants like JD.com and traditional financial institutions such as Standard Chartered Bank in the sandbox for related stablecoins, there has been a flurry of activity in the digital asset sector.

Journalists have learned that Ant Financial Technology (Ant Group's fintech arm) has recently disclosed that it is actively promoting the implementation of a cross-border Real World Assets-tokenization (RWA) project involving new energy assets abroad. Concurrently, ZABank, a virtual bank, has announced the provision of exclusive "reserve bank services" for stablecoin issuers.

Several industry insiders have told reporters that Hong Kong has advantages in financial infrastructure and policy environment in the development of RWA, but there is still a need for further improvement in the detailed regulatory framework. At the same time, whether RWA can gain sufficient market depth and trading volume to ensure the liquidity of assets and the stability of market prices is also one of the key points of market concern.

Linking Physical Assets with Digital Assets

RWA refers to a form where asset ownership is traded in digital form (Token) on the blockchain. RWA can divide physical assets into multiple "on-chain" digital assets, leveraging the interoperability of the global blockchain network to bring more liquidity to physical assets.

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However, virtual assets represented by Bitcoin do not correspond to physical assets, hence there are significant differences in application scenarios and pricing mechanisms between the two.

Recently, several internet giants and traditional financial institutions have entered the RWA field.

In terms of asset projects, Wang Wei, CTO of Ant Financial Technology, recently revealed that Ant Financial Technology is actively promoting the implementation of a cross-border RWA project involving new energy assets.

Wang Wei stated: "As a new exploration in our overseas business segment, RWA aims to build a technological bridge for physical enterprises and provide unique value."

In terms of stablecoins, following the recent announcement by the Hong Kong Monetary Authority of the first batch of "stablecoin issuer sandbox" participants, in addition to issuers like JD.com and Standard Chartered Bank, more financial institutions are also getting involved.The inflow of these funds will not only drive the expansion of the RWA market but also further promote the maturation and popularization of the Web3.0 ecosystem, ultimately forming a more efficient and inclusive global financial system.

Journalists have noted that in BlackRock's exploration, the key roles of compliance and security have been emphasized. In Yu Jianing's view, ensuring compliance and security in the application process of tokenized assets is a prerequisite for gaining market trust. This provides an important reference for the development of China's RWA. In fact, compliance is one of the most concerned issues for regulatory authorities and financial institutions regarding RWA at present.

Recently, it can be determined that transferring and converting criminal proceeds and their benefits through "virtual asset" transactions constitutes money laundering crimes. Previously, in the Hong Kong Monetary Authority's consultation summary on the stablecoin sandbox, although no specific recommendations were given on anti-money laundering for stablecoins, it was clearly stated that "separate guidelines consistent with the international standards formulated by the Financial Action Task Force (FATF) will be issued, including anti-money laundering regulations such as transaction monitoring and compliance with transfer rules."

This indicates that Hong Kong regulatory authorities have recognized the importance of anti-money laundering and security issues for stablecoins. Yu Jianing stated that although Hong Kong has many advantages in developing RWA, such as a well-established financial infrastructure and a favorable policy environment, there are still areas that need further improvement.

Specifically, on one hand, in the emerging field of RWA, the regulatory framework still needs to be further clarified and refined. RWA involves complex issues such as asset ownership, transaction security, and data privacy, and the existing legal and regulatory systems may not be sufficient to fully address these challenges. On the other hand, the success of RWA depends on the maturity and popularization of emerging technologies such as blockchain and smart contracts.

In this regard, some industry insiders also told reporters that, in addition to the need for an appropriate regulatory framework, it is also necessary to rely on more technical means to enhance the ability of issuers and regulatory authorities to deal with various risks, such as money laundering through RWA.Considering that RWA transactions primarily occur on blockchain networks (especially public blockchain networks), on-chain transfers and transactions have strong anonymity and resistance to censorship, making it difficult for conventional risk control technologies and systems to effectively address and combat money laundering and terrorist financing activities.

The person believes that in addition to completing due diligence and transaction monitoring as required by regulations, it is also necessary to further improve on-chain monitoring mechanisms. By adopting blockchain analysis tools and other technological solutions, the ability to analyze on-chain addresses, monitor on-chain risks, and track on-chain assets should be enhanced.