RWA Blockchain Selection: Embedded Compliance, External Trust

Written by: Zhang Feng

With the official implementation of the Hong Kong Stablecoin Regulation in 2025 and the deepening of the regulatory sandbox mechanism by the Monetary Authority, physical assets in mainland China such as photovoltaic power stations, commercial real estate, and supply chain finance are flowing into the global capital market in the form of tokens through Hong Kong.

However, under the policy dividend, a key decision concerning the success or failure of the project is how to choose a blockchain infrastructure that deeply aligns with the Hong Kong regulatory framework? This decision not only affects technical feasibility but also determines whether the project can bridge the compliance gap and gain market trust.

1. Ensure performance and security requirements

In the strict RWA regulatory environment in Hong Kong, the performance and security of underlying blockchains are not merely technical issues, but rather a lifeline for the survival of projects. From sandbox practices, successful cases generally exhibit three major technical commonalities.

High concurrency processing determinism: Some REIT-like RWA projects require T+1 settlement, demanding the blockchain to process thousands of transactions per second while ensuring the irreversibility of transactions. Additionally, projects with high demands for secondary trading need to effectively prevent the risk of CLO (Collateralized Loan Obligation) tranches being inadvertently intercepted during the rebalancing process, requiring sub-second processing technology. This determinism is crucial for financial-grade applications.

Enterprise-level privacy and cross-chain compatibility: The Hong Kong Monetary Authority has strict requirements for the privacy protection of asset data. It is generally believed that using permissioned blockchain architectures like Hyperledger Fabric allows participating nodes to complete audit penetration while protecting sensitive commercial information. Smart contract security and oracle reliability: Lessons learned from some projects being urgently halted due to asset authenticity vulnerabilities indicate that contracts not subjected to rigorous audits are akin to financial time bombs. Meanwhile, some projects employ a dual oracle system consisting of Chainlink and API 3 to provide price feeding services resistant to single points of failure for cash flow assets such as photovoltaic power station revenue rights, ensuring that on-chain prices are tightly anchored to the real world.

2. Embedded Regulatory Compliance Requirements

The Hong Kong RWA sandbox is by no means a technological testing ground, but rather a testing stage for regulatory compliance. Blockchain infrastructure must embed compliance capabilities to avoid a hard legal landing later on.

License Adaptability and Regulatory Interface: According to the requirements of the Hong Kong Securities and Futures Commission, the issuance of tokenized REITs must go through the review of Section 103, and the underwriter must hold a Type 1 license. Therefore, a regulatory node is designed for this blockchain, allowing the Monetary Authority to monitor on-chain transactions in real time while isolating sensitive business data. This "visible but untouchable" regulatory-friendly architecture has become the admission ticket for sandbox projects.

Compliance with Identity and AML Mechanisms: Anonymized wallets participating in RWA transactions are a red line in Hong Kong. Therefore, the blockchain needs to integrate an AI behavior modeling engine to dynamically analyze address associations. It is necessary for both compliant RWA asset issuance platforms and DeFi platforms to utilize professional KYC service providers to ensure that relevant accounts meet the compliance trading requirements for related products, while also relying on on-chain AML firewalls to trace the flow of funds throughout the entire process.

Legal Entity Mapping and Jurisdiction Weight: A certain project in Singapore directly encodes the terms of the fund contract into a smart contract, making the token transfer automatically trigger legal effectiveness. This requires the blockchain to support Legal Smart Contracts, clearly stipulating the jurisdiction of the Hong Kong courts and the dispute resolution mechanism, in order to avoid decentralized technology undermining territorial judicial authority.

3. Penetration verification of asset credibility

The core risk of the RWA project lies in the skepticism of "air assets"—the blockchain must establish a fully verifiable path from on-chain tokens to off-chain assets.

Asset anchoring and custody proof: When US Treasury bonds are tokenized, top banks issue daily reserve audit reports and hash them on-chain, allowing investors to verify the custody status at any time. This "off-chain custody + on-chain verification" model has become a compliance standard. Hong Kong further requires the establishment of a 20% cash reserve pool (such as USDC) to cope with redemption fluctuations.

Cash flow automation and permission hierarchy: After the tokenization of income rights such as rental income from commercial real estate, it is necessary to ensure that the income is automatically distributed to the holders. At this point, it may be required to automatically distribute dividends through smart contracts and set up permission-level management for sensitive data. For example, a photovoltaic power station project can achieve income flow distribution with second-level precision through the ERC-3643 token standard.

Cross-chain risk isolation: Some projects attempt multi-chain issuance to diversify risk, but Hong Kong regulators prefer a main chain + subnet architecture. Some projects isolate different levels of assets (such as U.S. Treasury bonds and high-risk CLOs) through subnets to avoid risk contagion. This "risk compartment" design aligns with the Monetary Authority's core demand for financial stability.

4. Legal Remedies for Rights Protection

When choosing a blockchain, it is important to remember: every token is backed by legally protected property rights, and the infrastructure must provide end-to-end protection for investors.

On-chain governance and empowering investors: Some projects allow token holders to directly participate in governance voting and receive rewards through integrated Web 3 wallets, with their smart contracts automatically executing the voting results to ensure that power is not intercepted by the project party. For example, under this design, if an RWA project needs to change decisions regarding asset disposal, it could potentially achieve collective decision-making on an hourly basis.

Payment guarantees and liquidation priorities: When the underlying assets default (such as uncollected receivables), the blockchain must clarify the liquidation order of various tokens. The smart contracts related to RWA projects automatically freeze risk categories and prioritize payments to higher-tier holders, with rule execution transparency far exceeding that of traditional finance.

Dispute Resolution and Judicial Connection: A commercial real estate project has preset arbitration clauses in its smart contract. When a lease dispute triggers an on-chain alert, the system automatically freezes the related asset revenue stream and initiates arbitration in Hong Kong. This "code + law" dual-trigger mechanism prevents investors from falling into the dilemma of rights protection in a technical maze.

V. Strategic Recommendations: A Scenario-Based Blockchain Selection Framework

Faced with diverse technological options, project parties should abandon the single metric determinism such as "only TPS theory" and instead conduct a three-dimensional assessment of regulatory adaptability, technical feasibility, and asset matching degree:

High-value non-standard assets: Permissioned blockchain priority: For complex subjects such as artworks and unlisted equity, choose permissioned blockchains like Hyperledger Fabric, and open nodes to regulators through private channels. Legal opinion letters are required to clarify token attributes (to avoid disputes over securities recognition) and exclusive jurisdiction of Hong Kong courts.

Stable cash flow assets: Hybrid chain optimal: Assets that generate stable cash flow such as photovoltaic power stations, warehousing and logistics, with AI compliance engines and regulatory sandbox compatibility becoming the preferred choice. Its modular design supports rapid integration into the digital Hong Kong dollar system, aligning with Hong Kong's strategic direction for developing wCBDC.

Global financial assets: Compliance public chain breakthroughs: For highly liquid targets such as U.S. Treasury bonds and CLOs, institutional-level infrastructure and subnet isolation features become the technological bridge for multinational issuance. However, a foreign exchange control buffer period of 9-12 months needs to be reserved.

Hong Kong is reshaping the global RWA landscape with a "policy openness + technology implementation" dual-spiral model. The essence of blockchain selection is to find the maximum intersection between regulatory compliance and technological innovation. Only a blockchain that excels in the four dimensions of technical reliability, compliance compatibility, asset transparency, and user rights can bear the grand mission of transitioning trillion-level physical assets to a digital future. (Images in the text were generated by Doubao)