Understanding the Significance of RWA Regulation Differentiation in Hong Kong within China's Supervisory Framework

The significance of the regulatory status difference between domestic RWA and Hong Kong-based RWA is becoming increasingly important as the tokenized asset industry develops. According to the latest Caixin report, the People’s Bank of China, along with eight other departments, has issued a comprehensive regulatory framework that clearly delineates the supervision of domestic and overseas RWAs.

Document No. 42: Dual-Track RWA Regulatory Strategy

The latest policy document (Document No. 42) reflects a more segmented regulatory approach. The framework indicates a strict stance toward issuing domestically-based RWAs to international markets. Strict bans on domestic RWA within China and tight oversight of those issued abroad are the main tones of this policy.

Regulation no longer adopts a one-size-fits-all approach but differentiates based on the location of issuance and the underlying asset type. This creates distinct regulatory zones with clear responsibilities and supervisory authorities.

Hong Kong RWA Outside Domestic Authorities’ Reach

According to sources familiar with the regulatory details, Hong Kong has been designated as one of the offshore RWA issuance centers. This status has important implications: RWAs based on Hong Kong assets are not covered by Document No. 42 and are not under the jurisdiction of China’s domestic regulatory departments.

The situation differs if RWAs based on domestic assets or local securities are issued in Hong Kong or other foreign jurisdictions. In such cases, the China Securities Regulatory Commission (CSRC) Department of Institutions has direct jurisdiction. However, current regulations do not permit such scenarios—this is considered a total ban.

Key Nuance: “Not Prohibited” Does Not Mean “Encouraged”

The policy change reflects a subtle but significant strategic meaning. The shift from “completely prohibited” to “not forbidden” indicates greater regulatory flexibility but should not be mistaken for active promotion of RWA development.

Authorities clearly distinguish between allowing (tolerance) and promoting (incentives). Hong Kong-based RWAs with local assets can operate in a regulatory gray area, but without positive support from authorities. This is a key characteristic of the new framework, which educates market participants about the boundaries and opportunities within the global tokenized asset ecosystem.

Strict supervision of domestic asset RWAs moving into international markets remains a top priority, while Hong Kong-based assets are left to operate within an independent ecosystem according to local regulations.