Regulatory crackdowns have swiftly chilled the real-world asset (RWA) tokenization market.
Seven Chinese financial industry associations, including the National Internet Finance Association and the Securities Association of China, jointly issued a risk warning against virtual currency-related illegal activities. The notice explicitly prohibited member institutions from participating in or facilitating domestic RWA token issuance and trading, marking the first official regulatory stance on RWA.
Industry insiders report a dramatic cooling of mainland enterprises' interest in Hong Kong-based RWA projects. Intermediaries disclosed a 90% drop in inquiries from mainland clients over the past two months, with most ongoing projects put on hold. Stocks tied to RWA concepts, such as Gcl Energy Technology Co.,Ltd. (002015.SZ), have seen their share prices halve from recent peaks.
The regulatory notice classified RWA tokens alongside stablecoins and speculative cryptocurrencies as prohibited virtual currency activities. It expanded oversight to cover the entire ecosystem - from project developers to service providers including marketing agencies and payment processors. Legal experts note the "know or should have known" standard significantly lowers the liability threshold for participants.
Behind the crackdown lies concern over multiple risks. Authorities highlighted issues including fraudulent assets, operational failures, and speculative trading in unauthorized RWA offerings. Despite growing popularity in Hong Kong, where over 13 institutions have explored RWA projects backed by assets ranging from renewable energy equipment to agricultural products, regulators see mounting dangers.
Financing costs remain steep, with typical Hong Kong RWA issuance expenses exceeding HK$2.5 million. Some sponsors charge 3-5% commissions, while issuers must guarantee investor returns. These high costs have distorted some projects' original purpose of asset revitalization into tools for market capitalization management.
Regulatory gaps persist. A 2025 industry report co-authored by Hong Kong Web3.0 Standardization Association and Hong Kong Polytechnic University noted RWA exists in a patchwork of regulatory overlaps and voids. Experts emphasize the need for enhanced transparency and custodial mechanisms to prevent systemic risks.
The immediate trigger for regulatory action appears to be a surge in RWA-related scams. Multiple regional regulators have warned about fraudulent schemes disguised as RWA investments since mid-2025.
While Hong Kong's official fintech initiatives continue - including the HKMA's Ensemble project advancing tokenized deposits - cross-border RWA activity from mainland firms has frozen. Intermediaries report nearly all mainland inquiries have ceased since Q3, with existing projects largely suspended. Some companies are shifting focus to alternative digital assets like real data assets (RDA).
Market reactions have been severe. Companies previously enthusiastic about RWA prospects now uniformly state they have "not initiated related business" in investor communications. Stocks that rallied on RWA hype, including Gcl Energy Technology Co.,Ltd., have retreated sharply, with many losing half their value from recent highs. GUOTAI JUNAN I (01788.HK), which saw its shares jump 15% after launching tokenized structured products in August, has since fallen back to HK$2.46, a 50% decline.