Traditional financing methods heavily rely on the creditworthiness of the financing entity.

RWA (Real World Asset Tokenization) facilitates investors in assessing the credit of the assets themselves by splitting physical assets into multiple "on-chain" digital assets, thus bringing more liquidity to physical assets and reducing transaction and financing costs.

In the future, 100 charging piles and 100 vehicles may all become digital assets for financing.

Recently, the Hong Kong Monetary Authority announced four tokenization asset cases, one of which was completed by Ant Financial and Langxin Technology based on new energy physical assets.

This provided a new possibility for physical asset financing.

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RWA, or "Real World Asset Tokenization," refers to the transformation of rights related to traditional financial assets (stocks, bonds, etc.)

and physical assets (real estate, art, etc.)

into digital tokens on the blockchain.

These digital tokens represent ownership or shares of traditional financial assets and physical assets.

Bai Haifeng, Co-Head and Managing Director of China Merchants International Asset Management, wrote that theoretically, any valuable asset can be tokenized.

The advantages of asset tokenization are mainly based on decentralization and the underlying technology of blockchain.

By creating ecological applications, it solves the drawbacks that appear in traditional finance.

This is a form of trading asset ownership in digital form (Token) on the blockchain.

In the aforementioned case, Langxin Technology used over 9,000 new energy charging piles as anchor assets to issue and finance 100 million yuan on the blockchain.

Zhao Wenbiao, CEO of Ant Financial, said that traditional financing methods heavily rely on the credit of the financing entity, while RWA can facilitate investors in assessing the credit of the assets themselves, thus solving the problems of difficult and expensive financing for small and micro enterprises with high-quality assets.

In recent years, many international financial institutions have successively laid out RWA.

According to media reports, in 2023, Goldman Sachs' digital asset platform officially went online, which once helped the European Investment Bank issue 100 million euros of two-year digital bonds: UBS launched a tokenization system that can be used to issue tokenization structured notes; HSBC launched a platform that uses blockchain technology to tokenize the ownership of physical gold in its London vaults.

How does RWA achieve the link between the real world and the digital world?

How big is its imagination space?

What is the market space?

On September 5, at the "Web3 Digital Dreams Materialization" sub-forum of the 2024 Inclusion Bund Conference held in Shanghai, experts from academia, industry, technology, and other fields discussed the prospects and future of RWA.

The new vision of physical financing mentioned above stems from the financing difficulties of small and medium-sized new energy operators.

The popularization of new energy vehicles has given birth to a large number of charging pile operators.

According to Xu Changjun, Chairman of Langxin Technology, 85% of current charging service providers are small and medium-sized enterprises, more than 82% of operators have only 10 or less charging piles, and more than 50% of operators have investments of less than 1 million.

Currently, on the third-party aggregation charging service platform of Langxin Technology, 1,600 new energy operators have been aggregated, with 140,000 charging stations and more than 1.4 million charging guns/piles.

"Small and medium-sized operators themselves have poor risk resistance, and financial institutions find it difficult to provide financing loans to small and medium-sized operators.

Frankly speaking, they also cannot find a way," Xu Changjun said.

The RWA of new energy physical assets is achieved by using artificial intelligence, blockchain, and IoT (Internet of Things) fusion technology to package and store data such as the value of charging piles, operations, and income on the blockchain, forming digital tokens (i.e., digital tokens), and then issuing financing to achieve tokenization.

At the Bund Conference, Ant Financial disclosed more details of this RWA.

It is reported that in order to achieve the RWA of mainland new energy assets in Hong Kong, the relevant parties have built a two-chain and one-bridge structure from the perspective of cooperation between the mainland and Hong Kong, linking tokenized assets and tokenized funds.

Domestically, through the asset chain, physical assets are tokenized into standard data and tradable financial products.

In Hong Kong, a trading chain is built to tokenize funds, especially funds from traditional financial institutions' legal currency, unified on the Ensemble (sandbox) project, to truly open up funds for transactions.

Subsequently, at the media exchange meeting, Zhao Wenbiao likened RWA to a mini-IPO (Initial Public Offering).

Wang Wei, CTO of Ant Financial, explained to "Finance" that "RWA has a significant difference from IPO, which is that the financing entity has changed from companies to high-quality assets.

This change has brought a lot of imagination and possibilities.

Similar to corporate financing, due diligence is required, and physical asset financing also needs to do a credible investigation.

Web3 technology has solved the credibility problem of physical assets."

Web3, also known as Web3.0.

In the "2024 Shanghai WEB3.0 Innovation Ecology Construction Research Report" released in June this year, Web3.0 is defined as the next generation of the Internet centered on blockchain and other technologies, which is decentralized and allows users to control their own data identity and digital assets.

Industry insiders believe that compared with the difficulties of asset confirmation and trading of physical assets, RWA can split physical assets into multiple "on-chain" digital assets, and bring more liquidity to physical assets through the interconnectivity of the global blockchain network, reducing transaction and financing costs.

The aforementioned industry insiders said that the landing of new energy asset RWA has ignited the financing dreams of small and micro enterprises.

The person in charge of Langxin Technology said that after the aforementioned project was released, more small and medium-sized new energy operators called to inquire about the situation of RWA, and the future is very promising.

"RWA, as a bridge linking the digital and physical worlds, is a vivid practice of finance returning to its origin and serving the high-quality development of the real economy."

Xiao Gang, the 13th National Committee member and former chairman of the China Securities Regulatory Commission, said.

Xiao Gang mentioned that China's traditional industries, especially the manufacturing industry, have accumulated a large amount of real assets, but they are often discounted due to lack of liquidity, or because they have not been well operated, resulting in low asset utilization rates, which restricts the release of economic growth potential.

RWA, through blockchain and other Web3 technologies, gives digital form to physical assets and intangible assets such as intellectual property rights, carbon credits, and data elements that already exist in the real world, establishing a value mapping between the real world and the digital world.

On the one hand, the digital characteristics of RWA can enhance the liquidity and tradability of real assets, allowing more investors to obtain investment opportunities in high-quality assets and unblock the financing bottlenecks of traditional industries; on the other hand, the use of blockchain and smart contract technology can improve the transparency of asset operation, management, disposal, and trading, reduce moral risk, and effectively improve asset transaction efficiency, and reduce transaction costs.

The prospects and risk prevention of RWA, according to the person in charge of Ant Financial, the aforementioned project is the first domestic project based on new energy physical assets RWA, which also means that the relevant exploration is still in its early stages, and there are still many problems to be solved in the future.

The first is the issue of compliance.

Zhu Dazhi, Co-Head of the Global Investment Banking Department of Swiss Bank, Asia-Pacific Technology, Media, and Telecommunications Industry, said, "Under different regulatory frameworks, whether the product is fully compliant requires a legal framework to provide confidence to investors and issuers."

The change in the value of physical assets themselves is also a difficult problem.

Xiao Sa, a senior partner of Beijing Dacheng Law Firm, warned that in his past due diligence on physical assets, there were cases where the value of assets depreciated by 15% within a period of time.

"This is a big problem, and assets cannot be viewed in a static way," said Xiao Sa.

Some physical asset RWA also involves privacy issues.

The aforementioned person in charge of Langxin Technology said, "The new energy assets on the user side will provide services to C-end users, which may also involve user privacy data.

How to fully disclose and isolate between user privacy protection?

This is the content that the asset side needs to consider."

In addition, the overall industry standardization needs to be improved.

Yu Xian, the founder of Slow Mist Technology, mentioned that there have been some RWA gimmick projects in the market in the past, and the project party concealed its issuance rights, which may harm the interests of investors.

"But the real meaning of RWA projects, based on blockchain, has unalterable, auditable, and transparent characteristics, and is of great value to the circulation of high-quality assets in combination with entities."

"As we embrace Web3 technology, we must also be clear that any technological progress comes with risks and challenges.

How to effectively control risks while promoting technological innovation is an important issue in front of us," Xiao Gang reminded that while exploring and carrying out innovative pilots, we should also look ahead and strengthen supervision.

"Bitcoin and other virtual currencies are not equal to Web3, and tokens (tokens) are not necessarily completely decentralized."

Xiao Gang emphasized, "We should adopt a technology-neutral principle, often talk about adhering to the principle of technological neutrality, focusing on the risks that Web3 may bring, focusing on the authenticity, compliance, and volatility of RWA assets, strictly controlling risks at the off-chain asset end, and strictly controlling speculation at the on-chain trading end."

At the same time, we should strengthen risk management and technology ethics education, enhance the public's risk awareness, and strengthen industry self-discipline.

In addition, promote international cooperation, encourage market institutions with strong scientific and technological strength to participate in international innovation projects, learn from international experience.

At the same time, strengthen cross-border regulatory cooperation, coordinate policy formulation, and jointly explore a regulatory framework adapted to new technologies.

According to a report by Boston Consulting, by 2030, the global tokenization asset scale will reach 16 trillion US dollars, accounting for 10% of the global GDP (Gross Domestic Product).The forecasts from other institutions are 2 trillion and 8 trillion dollars respectively.

Zhao Wenbiao stated, "Whether it's a scale of 2 trillion, 8 trillion, or 15 trillion dollars, it's a very large track, and it's the track we want to lay out."

At the same time, Zhao Wenbiao candidly admitted that the current business model of RWA is not very clear.

"We are the technology providers, and there are many possibilities for the business model in the future, but it's too early to discuss now."