The RWA craze is coming: Five perspectives to interpret new opportunities for on-chain assets.

Every Thursday at 7:30 PM, the Encryption Tavern opens on time! From investment jargon, entrepreneurial stories, the ups and downs of projects, to hot topic rants, Airdrop traps, and track predictions... We discuss Web3 topics you want to hear in an easy way! In the face of regulatory policy changes and sudden shifts in compliance direction------don't panic! A senior lawyer will personally interpret hot regulatory events for you and help you gain insight into trends!

This issue of the Crypto Tavern focuses on the RWA (Real World Assets) boom, discussing the full-chain roles of RWA, market projects, industry prospects, regulatory changes, and investment opportunities with guests. As a bridge between traditional finance and new finance, RWA is attracting global attention. The lineup of guests for this issue is impressive, covering technical, incubation, strategic, and compliance perspectives, together answering five questions to provide the audience with an in-depth and easy interpretation!

Host: Welcome everyone to the eighth episode of the encryption tavern! RWA is a hot topic right now, and we will step out of traditional perspectives to discuss gold mining opportunities across the entire chain. Each episode focuses on influential topics, co-hosted by two curators. Now, let's invite the guests to introduce themselves, starting with Dr. Beihai!

Dr. Beihai: Hello everyone, I am Beihai. I entered the industry in 2014 and was involved in BTC development early on, with 11 years of industry experience. I participated in and witnessed the development of DeFi from 0 to 1, and I am currently focused on BlockValley, building RWA full-chain liquidity infrastructure. Blockchain infrastructure is gradually merging the boundaries between real and virtual assets, with enormous potential for the future.

In the project area I belong to, BlockValley, we are building a comprehensive liquidity infrastructure, similar to a bridge for the cross-chain flow of stablecoins. In the future, there may be thousands of stablecoins, and cross-chain flow will require support from decentralized protocols. We enable any asset to achieve free flow through smart contracts, like an on-chain upgrade for Web2 payment settlements. For example, users do not need to transfer across banks; on-chain assets can be settled directly, resulting in higher efficiency. In the future, assets will no longer be limited to a single chain or a single Token; 100 stablecoins can also circulate freely through infrastructure.

Fabulous Lawyer: Hello everyone, I am Fabulous Lawyer. I entered the circle since the rise of Bitcoin inscriptions and have been active in on-chain investments. My undergraduate background is not in law, but I was inspired by American dramas to pursue a legal path. Later, I studied law in Hong Kong and worked in the courts. I am very happy to participate in today's RWA topic and discuss and learn together with everyone.

Eliora: Hello everyone! I am Eliora, focusing on Web3 globalization, brand building, and market strategy, having participated in several on-chain projects. Today, I am very happy to talk with you about RWA and look forward to sparking ideas!

Dr. Zhao: Hello everyone, I am Dr. Zhao. I entered the space in 2018, focusing on exchange product operations and markets, and have participated in the construction of several exchanges in China, India, and Hong Kong. I am now initiating the RWA Wave Laboratory, believing that RWA is the bridge between traditional finance and new finance. It is not only a short-term hot topic but also an important long-term track. We provide RWA consulting, legal structuring, and business building services.

Host: Tonight we have a diverse lineup of guests with rich backgrounds, looking forward to an in-depth discussion! It's about time, let's get straight to the point.

Q1: In this RWA boom, what roles and ways are the guests participating?

Dr. Beihai: The implementation of RWA is not only about asset on-chain, but also about the transformation of production relationships and social relationships. Real-world assets far exceed the scale of the cryptocurrency circle, potentially reaching over $16 trillion in the next five years, and entering the cryptocurrency space will reshape the industry ecosystem. Blockchain returns to the essence of settlement and payment, becoming the underlying infrastructure, similar to the internet's TCP/IP protocol.

BlockValley is positioned as a connecting hub, linking domestic and overseas, Web2 and Web3, on-chain and off-chain, real and virtual assets. We connect "people, goods, and venues" through consulting, platform incubation, distribution, and issuance, realizing the value flow of RWA. For example, listed companies can use us to put assets on-chain, attract on-chain users, open up a second battlefield, and achieve long-term growth.

The liquidity of on-chain assets is the core of RWA. Traditional financial assets are restricted by banks or brokers, while on-chain assets achieve decentralized circulation through smart contracts. For example, gold and real estate can be mapped as on-chain certificates, allowing for trading at any time without intermediaries. BlockValley provides infrastructure support to ensure seamless flow across chains and assets, reducing trust costs.

Dr. Zhao: RWA Wave Lab is an incubator collective that integrates technology, product, and brand resources to provide RWA services for listed companies and traditional enterprises. We help clients sort out equity, legal frameworks, and business logic, assisting in the issuance of RWA projects. RWA is similar to the big data or "Internet+" wave of 2015, where traditional enterprises need to transition from old finance to new on-chain finance. We eliminate cognitive and information gaps, enabling enterprises to participate in the wave. For example, Hong Kong and US listed companies can design compliant RWA solutions through us to attract on-chain funds.

Eliora: The concept of RWA is diverse, including stablecoins, securitized assets, etc., with different forms and endpoints. We play the role of on-chain RWA issuers and solution providers, with the core being the full-chain liquidity infrastructure. We launched the native stablecoin VUSD, supporting no-bridge cross-chain transactions, allowing users to seamlessly purchase RWA assets issued on certain public chains with VUSD, addressing the liquidity pain points on the chain. RWA needs to meet the convenience of global users for purchasing and the transparency of smart contracts. We support project parties in achieving full-chain asset circulation through infrastructure and Tokenomics design.

Better Call Saul: We play a triple role in the RWA wave:

1. Concept popularization: Through live broadcasts, events, and sharing with judicial departments, educate enterprises and regulatory agencies about RWA, and answer inquiries from clients on whether they are suitable for issuing RWA.

2. Legal services: Design SPV structures to isolate risks for companies issuing RWA, recommend offshore registration locations such as the Cayman Islands and BVI, and provide compliance framework support in Hong Kong.

3. Future Plans: Integrate resources from licensed institutions, technology companies, and consulting firms to create a one-stop RWA incubation service, helping clients to smoothly issue.

We focus on Compliance as the core, connecting enterprises with the on-chain ecosystem.

Q2: Which RWA projects in China are worth paying attention to? What is the recent hotly discussed RWA project?

Better Call Saul: A certain listed company is a large infrastructure equipment manufacturing and leasing company. Its NFT is linked to cash dividends of 50,000 stock rights each year from 2025 to 2027, and users can become brand ambassadors by locking the NFT through a mini-program. RWA digital products collaborate with a certain digital partner, mapping the usage and operational rights of the equipment, with no transfer of ownership.

But its operation carries compliance risks:

1. Technical deficiencies: Rights are confirmed only through mini programs instead of smart contracts, lacking on-chain transparency and insufficient protection of user rights.

2. Regulatory gray area: Although it claims to be a non-financial product, it essentially involves securitized returns, similar to US stocks and Hong Kong RWA, which require cooperation with licensed institutions (such as brokerages and custodians). Domestic regulators view RWA as securities, posing greater risks in the future.

The company has a state-owned background and may have "domestic gameplay," but it is not user-friendly enough.

For other RWA projects, I am more concerned about traditional finance, such as the tokenization projects of U.S. stocks on certain well-known platforms, where the circulation efficiency of on-chain assets is higher, representing the future trend.

Eliora: I have learned about some domestic listed companies' RWA projects, which are mostly self-buying and self-selling, have not successfully raised funds, and have heavy speculation, making the discussion of value limited. The true value of RWA lies in its global influence, financing, and ongoing value creation on the chain, but many domestic projects are "Chinese people playing with Chinese people," lacking Crypto Native attributes and failing to achieve cross-border circulation or ecological landing. In contrast, projects with greater on-chain arbitrage opportunities deserve more attention.

Beihai Doctor: There is a disconnect between domestic RWA projects and the on-chain ecosystem. Some projects are aimed at Web2 users rather than on-chain players, similar to the operations of digital collection platforms. Domestic digital collections have become speculative due to the NFT ban, connecting through third-party payments and the secondary market, but the target is off-chain users, not on-chain transactions.

Recently, the A-shares have been hotly discussing RWA, with some AI companies raising billions for strategic layout or financing needs, rather than on-chain implementation. The on-chain trading volume of RWA is low, such as projects like gold on-chain, with some holdings having only about 60 institutional addresses, and retail participation is minimal. Some public chains are laying the groundwork for RWA infrastructure, and in the future, as modularization improves, the disconnection between traditional and on-chain will decrease. Listed companies can attract on-chain users through compliance channels, opening up a second battlefield and creating a virtuous cycle.

Dr. Zhao: A certain company has insufficient information disclosure and is currently mostly in the hype stage. RWA can be divided into physical and non-physical categories and must possess Crypto Native attributes. From a decentralized perspective, RWA is a bridge for the transition from traditional finance to new finance, similar to the transitional period established by the Yuan Dynasty, where there may be a "second harvest" of traditional funds on on-chain users.

To evaluate RWA, one must look at the completeness of the data on the blockchain regarding the Internet of Things. For example, power-related projects from certain large tech companies (such as charging piles and energy storage) have clear and traceable data, which holds value potential. In the United States, certain charging pile RWAs also have a solid foundation. Conversely, physical projects with incomplete data have a large space for speculation, but their long-term feasibility is low.

Q3: What is the scale outlook of the RWA market? In which countries, industries, and tracks are the market opportunities mainly concentrated?

Dr. Zhao: The RWA market has huge potential, with the United States, China, and the European Union being the main players. Projects with complete data have the most potential, such as the tokenization of US stocks, which is hot due to clear trading data and ease of on-chain integration; stablecoins are also very popular due to their simplicity and transparency.

Industry directions include:

1. Electricity: The data for projects such as power generation (biomass, energy storage), and charging stations is being improved. Recently, we have been in contact mainly with electric power companies, which are capital-intensive and have traceable data.

2. High-end liquor: For example, a well-known whiskey brand with a long history and thorough auditing, whose value increases over time, can achieve a good annual return. By splitting RWA (e.g., tokenization of oak barrels), the threshold for retail investors is lowered.

On a national level, the United States leads in data infrastructure, while I believe that China's electricity and alcoholic beverages RWA have great potential. Enterprises need to seize data completeness and compliance to gain a competitive edge in the market.

Eliora: The RWA market size could reach 16 trillion, far exceeding the cryptocurrency space. In terms of prospects, RWA may not be suitable for Chinese Web3 users due to greater on-chain arbitrage opportunities. Developing countries (such as Indonesia) have a lack of financial products and poor stock market liquidity, and RWA provides them with quality asset investment opportunities. For example, the insurance demand of Southeast Asian users can be met through RWA with a monthly contribution of 20 dollars, enhancing the asset preservation capability.

Dr. Beihai: The RWA market is enormous, and all enterprises can issue multiple lines of RWA, continuing to grow over the next 5-10 years. Last year, companies achieved double growth by purchasing BTC and ETH, but this year the risk of entering at high levels is significant, making RWA a safer choice that can accommodate large amounts of capital.

Opportunities are concentrated in:

1. Regulatory-friendly regions: Hong Kong, Singapore, Middle East (such as Abu Dhabi) have both regulation and encourage innovation, suitable for RWA issuance.

2. Six major industries: mainstream financial assets (bonds, securities, precious metals), lease rights (land, real estate, factories, automobiles), income rights (enterprise operations, P2P, energy), physically redeemable goods (wine, biscuits, textiles), emerging markets (carbon sinks), funds (family offices, private equity, public offerings through SPV issuance of RWA).

RWA maps a liquidity premium of 3%-8% on the chain, which is enough to determine the survival and death in traditional manufacturing competition, attracting companies to enter the market.

Better Call Saul: I think the prospects of RWA are concentrated in China, the U.S., and Europe, with the U.S. leading the trend and China having its own "characteristic play." Although the domestic market has not fully caught up with the blockchain wave, "scaled-back" RWA like digital collectibles are attracting funds to participate. In the future, China may form two modes both inside and outside the wall, similar to the development path of the Internet. In terms of industry, financial assets, electricity, and physical assets have the greatest potential, and it is necessary to combine local regulations with market demand.

Q4: What does everyone think about the new regulatory changes for global RWA in 2025?

Better Call Saul: RWA regulation trends towards securitization management:

EU: MiCA will be fully effective in 2025, refining tier two and three measures, classifying some RWA as securities, requiring disclosure and registration, and emphasizing KYC and AML.

United States: The SEC has released guidelines for the registration of tokenized securities, accelerating the layout of traditional institutions (such as certain large financial institutions), in conjunction with the encryption strategies of certain political figures.