With the rise of the RWA (Real World Asset tokenization) concept, more and more companies are contemplating:
Can I also move my assets onto the blockchain? Can I also raise funds, provide liquidity, and attract global investors?
But the reality is: RWA is far from being as simple as imagined.
From asset structure design, legal compliance, regulatory filing, to smart contract deployment and Token issuance and circulation, this is not a "coin issuance" project, but a system engineering project that spans on-chain and off-chain.
This article will help you see clearly in one go:
The 5 key issues that enterprises need to solve when dealing with RWA: What challenges can lawyers help you address at each step? Why these pitfalls must be avoided sooner or later.
The first pitfall: Assets are not just there because you say they are; you first need to "depict" them.
Many projects start by saying they want to do RWA, but —
Not clear about your underlying assets? Are they rights to income, debt rights, or securities? Do they have sustainable returns? Can they be legally transferred?
If these issues are not clear, then the project cannot be launched. What needs to be done at this stage is an asset eligibility analysis.
This step can help you with a lawyer:
Identify which of your assets are "tokenizable" to assess their yield structure, risk level, and compliance suitability, and to preliminarily determine whether they involve the regulatory red lines of finance, securities, and commodities.
This step is actually very simple; it helps you clarify whether your assets can be utilized and why you should do it. For example: if you want to send your child abroad for study, you need to first understand their academic background, interest direction, and budget capability. You can't just pay the tuition without even deciding on a major.
RWA is the same - not all assets are suitable for being on the chain, and not all on-chain assets have financing value.
The second pitfall: a dual approach of technology and law, don't let the project die structurally.
RWA is not as simple as "on-chain registration"; it is a full-chain design that achieves clear legal ownership, a closed loop of technical logic, and compliance from a regulatory perspective. You need to address at least three issues:
Is the ownership and transfer of assets legal? Is it transferable? How is the legal nature of restricted tokens defined? Could it possibly constitute a security token? Does the technical architecture support on-chain compliance? Can it meet regulatory requirements (such as traceability, black and white lists, etc.)?
In this step, the legal team is not the "coin issuance and stamping person," but rather the structural designer + regulatory translator + compliance liaison.
Compliance Architecture Design
Design optional structural schemes based on different asset forms, target investors, and business regions, such as:
Cayman Fund + BVI SPV (suitable for overseas financing and redistribution) Singapore VCC + MAS exemption pathway trust structure + domestic asset custody + overseas token mapping
These structures must not only consider tax compliance and regulatory penetration but also avoid triggering unnecessary cross-border financial regulatory obligations.
2.Token legal attribute determination (Token Classification)
This is the easiest place to "flip the car". We will combine the asset base, issuance purpose, investor rights, and regulatory classification standards to determine that the Token belongs to:
Security Token: Whether it has typical features such as "investment contract", "efforts of others", and "expectation of profits" (refer to Howey Test / MiCA / SFC Guidelines); Utility Token: Whether it is limited to usage rights and does not promise returns; Payment Token: Whether it has currency substitutability or broad trading purposes.
In addition, it is necessary to further determine whether the Token constitutes legally:
Debt instruments (such as accounts receivable/profit distribution rights) fund shares (triggering fund law or investment company law) trust beneficiary rights (requiring endorsement by the trustee) revenue rights forward contracts (Forward Revenue Contract)
Each legal attribute corresponds to completely different methods of issuance, trading, and tax treatment. If misjudged as "functional type" while essentially being "security type," the project may trigger the risk of illegal securities issuance, leading to delisting or investigation.
Technology + Compliance Linkage Mechanism
Lawyers also need to engage with the technical team to participate in the following compliance embedding:
White paper, legal review of the token economic model, KYC/AML mechanism design (including extraterritorial personal information protection systems such as GDPR, PDPA), data on-chain and off-chain information synchronization structure (IPFS, Merkle Tree or zk proof), whitelist management, address filtering, transaction limit design (such as compliance with OFAC or FATF requirements)
Pitfall 3: Don't let the project get "stuck" on the launch line.
You have designed the structure and prepared the assets, so the next step is token issuance.
Lawyers can help you handle:
Token subscription agreements, profit agreements, custodial agreements, private placement documents, and a full set of documents interface with third-party institutions (evaluation companies, custodians, accountants, etc.) to review key terms of smart contracts, ensuring that on-chain logic matches legal logic and assisting in planning private placement paths and whitelist rules.
Many projects get stuck at this step: contracts are rough, rules are vague, and documentation is incomplete, resulting in problems during fundraising and a lack of protection for investors' rights.
Pitfall Four: Launch ≠ Free Trading, RWA liquidity is not necessarily "free".
Many project teams mistakenly believe that: "Once my RWA Token is launched, it can start trading."
In fact:
Whether it can be launched depends on whether it triggers securities issuance regulations. The acceptance of RWA-type assets varies across different countries/platforms. Are your assets transparent, have a pricing mechanism, and provide reliable returns?
Common reasons for limited liquidity include:
The asset's basic information is not transparent (not in line with the trust logic of the DeFi market), lacking oracle support, with no on-chain real returns or buyback mechanism, making it difficult to assess value. Asymmetric risk leads to difficulties in off-chain circulation.
At this stage, the lawyer can:
Prepare the compliance opinion letter, risk control disclosure, and the design of the investor prospectus required for the exchange, and connect the circulation mechanisms such as token locking and phased release to domestic and foreign compliant platforms, providing legal support for regular updates on regulatory policy analysis and adjusting circulation strategies.
Without a compliance opinion letter, don't even mention going on the platform; you might be denied access to the DID entry.
Pitfall Five: Sending is not the end, but the beginning.
A successful RWA project is more like a chain-operated REIT; it is not just a "one-off" but requires long-term operation and continuous compliance.
The lawyer will also assist you afterwards:
Establish a synchronous disclosure mechanism for on-chain and off-chain assets to optimize the release, destruction, and repurchase logic of tokens (in conjunction with market value management). Build a channel for investor relations management and compliance complaints to track regulatory changes, continuously optimize structural design. A truly qualified RWA project should possess the same prudent operational awareness as a "public company."
Summarize a table: What can lawyers do at different stages of RWA projects?
Conclusion:
RWA is not a "new bottle with old wine" for blockchain; it is a challenge and opportunity deeply coupled with law, finance, and technology.
If you are really ready to take this path, please remember:
Compliance must come first; do not experiment with the project's legal structure, which must be rigorous. Do not leave compliance loopholes. Technical implementation must "understand the language of the law"; do not let the contract create problems.
As a lawyer, we are not just the person who "stamps and signs", but also the one who builds bridges and paves the way for you between law, regulation, and the market.
After saying so much, you might ask a question:
"RWA is so complicated, and the compliance costs are so high. Why do I have to go through all this? Isn't it better to just stay in my familiar field?"
This problem is quite normal. After all, RWA, as an emerging concept, comes with cognitive thresholds, structural difficulties, and technological iterations. However, historically, every paradigm shift—whether from horse-drawn carriages to cars, or from paper money to electronic payments—initially seemed "troublesome, unnecessary, and inefficient." Until one day, we realize: the new paradigm is not meant to replace a portion of people, but to rewrite the entire market's rules of the game.
RWA is the same.
It is not just a technological innovation, but the beginning of how traditional assets are revalued in the global financial infrastructure. For enterprises, it signifies a fundamental reshaping of financing logic, liquidity management, and the way investors are reached.
The earlier you understand and layout, the more likely you are to secure your own place in the new rules.
Welcome to cooperate and consult. We are willing to be your long-term legal partner for the RWA project from 0 to 1.
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"RWA is not just about issuing a coin" | Five major pitfalls that enterprises must avoid when doing RWA
With the rise of the RWA (Real World Asset tokenization) concept, more and more companies are contemplating: Can I also move my assets onto the blockchain? Can I also raise funds, provide liquidity, and attract global investors? But the reality is: RWA is far from being as simple as imagined. From asset structure design, legal compliance, regulatory filing, to smart contract deployment and Token issuance and circulation, this is not a "coin issuance" project, but a system engineering project that spans on-chain and off-chain. This article will help you see clearly in one go: The 5 key issues that enterprises need to solve when dealing with RWA: What challenges can lawyers help you address at each step? Why these pitfalls must be avoided sooner or later. The first pitfall: Assets are not just there because you say they are; you first need to "depict" them. Many projects start by saying they want to do RWA, but — Not clear about your underlying assets? Are they rights to income, debt rights, or securities? Do they have sustainable returns? Can they be legally transferred? If these issues are not clear, then the project cannot be launched. What needs to be done at this stage is an asset eligibility analysis. This step can help you with a lawyer: Identify which of your assets are "tokenizable" to assess their yield structure, risk level, and compliance suitability, and to preliminarily determine whether they involve the regulatory red lines of finance, securities, and commodities. This step is actually very simple; it helps you clarify whether your assets can be utilized and why you should do it. For example: if you want to send your child abroad for study, you need to first understand their academic background, interest direction, and budget capability. You can't just pay the tuition without even deciding on a major. RWA is the same - not all assets are suitable for being on the chain, and not all on-chain assets have financing value. The second pitfall: a dual approach of technology and law, don't let the project die structurally. RWA is not as simple as "on-chain registration"; it is a full-chain design that achieves clear legal ownership, a closed loop of technical logic, and compliance from a regulatory perspective. You need to address at least three issues: Is the ownership and transfer of assets legal? Is it transferable? How is the legal nature of restricted tokens defined? Could it possibly constitute a security token? Does the technical architecture support on-chain compliance? Can it meet regulatory requirements (such as traceability, black and white lists, etc.)? In this step, the legal team is not the "coin issuance and stamping person," but rather the structural designer + regulatory translator + compliance liaison.
Conclusion: RWA is not a "new bottle with old wine" for blockchain; it is a challenge and opportunity deeply coupled with law, finance, and technology. If you are really ready to take this path, please remember: Compliance must come first; do not experiment with the project's legal structure, which must be rigorous. Do not leave compliance loopholes. Technical implementation must "understand the language of the law"; do not let the contract create problems. As a lawyer, we are not just the person who "stamps and signs", but also the one who builds bridges and paves the way for you between law, regulation, and the market. After saying so much, you might ask a question: "RWA is so complicated, and the compliance costs are so high. Why do I have to go through all this? Isn't it better to just stay in my familiar field?" This problem is quite normal. After all, RWA, as an emerging concept, comes with cognitive thresholds, structural difficulties, and technological iterations. However, historically, every paradigm shift—whether from horse-drawn carriages to cars, or from paper money to electronic payments—initially seemed "troublesome, unnecessary, and inefficient." Until one day, we realize: the new paradigm is not meant to replace a portion of people, but to rewrite the entire market's rules of the game. RWA is the same. It is not just a technological innovation, but the beginning of how traditional assets are revalued in the global financial infrastructure. For enterprises, it signifies a fundamental reshaping of financing logic, liquidity management, and the way investors are reached. The earlier you understand and layout, the more likely you are to secure your own place in the new rules. Welcome to cooperate and consult. We are willing to be your long-term legal partner for the RWA project from 0 to 1.
Original Author: Lawyer Niu Xiaojing