Caixin: RWA based on assets in Hong Kong, China are not under the jurisdiction of Chinese regulatory authorities

Deep Tide TechFlow News, February 22 — According to Caixin, following the joint release by the People’s Bank of China and seven other departments of the “Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies and Other Assets” (referred to as “Document No. 42”), the regulatory framework for RWA (Real-World Asset) issuance abroad by assets originating in China has begun to take shape. The overall tone of Document No. 42 emphasizes strict prohibition within China and strict regulation abroad of RWA. According to regulatory insiders, Hong Kong is one of the offshore RWA issuance locations. RWA based on assets in Hong Kong is not within the scope of regulation under Document No. 42 and is not under the jurisdiction of domestic regulators. Currently, there are no underlying assets based on domestic securities or funds in offshore RWAs in Hong Kong or other jurisdictions. If there are, they are under the responsibility of the China Securities Regulatory Commission’s Institutional Department. Additionally, “it was previously completely prohibited.” Now, “it is not said to be completely prohibited,” but there is strict regulation of domestic assets going abroad for RWA. There is no ‘encouragement’ implied here, and it should not be interpreted as ‘promoting development.’