Everything You Want to Know About RWAs But Are Afraid to Ask

As the digital transformation of finance accelerates, tokenized real-world assets (RWAs) are emerging as a bridge between traditional finance and decentralized markets. The innovation also raises critical legal and regulatory questions. This Q&A explores the evolving landscape of tokenized RWAs, addressing key topics such as how they can be bought and sold, whether they are considered securities, and what legal requirements issuers must meet to bring tokenized RWAs to market.

1. What are “real-world assets” (RWAs)?

Real-world asset (or RWA) is a term commonly used in the Web 3.0 ecosystem to describe tangible or traditional financial assets. These include physical assets, such as real estate, infrastructure, commodities (e.g., gold and crude oil) and equipment, as well as financial instruments, such as interests in private credit, private equity and accounts receivable, among others.

2. What does the “tokenization” of RWAs entail?

Tokenization is the process of creating digital representation (i.e., tokens) of certain rights to an asset on a distributed ledger technology (DLT) platform, typically a blockchain. DLT enables the tokenization of RWAs and the creation of fractional ownership on chain, primarily because:

1. It is decentralized, meaning that transactions can be verified without relying on any centralized authority.
2. It ensures immutability, providing reliable and tamper-proof record keeping.
3. It is programmable, using self-executing smart contracts to streamline governance, compliance and settlement processes.

3. Why is there growing interest in tokenizing RWAs?

Tokenization offers an innovative path to increasing capital formation by providing more liquidity to assets, including 24/7 trading capabilities and facilitating their use as collateral in blockchain-based protocols. It also allows consumers to maintain more of their financial life in the digital assets ecosystem and outside of the traditional banking system, which is an attractive feature to many people around the world.

4. Are tokenized RWAs “securities”?

It largely depends on the nature of the RWA that is tokenized and how broadly “securities” is defined under applicable law in the relevant jurisdiction. While currently most jurisdictions are lacking a dedicated regulatory framework for tokenized RWAs, their existing securities law regimes apply to the extent that the underlying asset is deemed a security. For example, US Securities and Exchange Commission (SEC) Commissioner Hester Peirce said in a February 2025 statement that creating a digital representation of any security on a blockchain does not change its nature. Similarly, Hong Kong’s Securities and Futures Commission (SFC) applies a “same business, same risks, same rules” approach to regulating tokenized securities, aligning with the principles advocated by international standard-setters, such as the Financial Stability Board (FSB). In addition to securities law regimes, many jurisdictions also have virtual assets, crypto assets or other similar laws that may apply to tokenized RWAs.

5. What are the legal requirements for issuing tokenized RWAs?

This is also a jurisdiction-specific question. One needs to assess the classification of such tokenized RWAs in the relevant jurisdiction(s). In the US, while certain crypto assets are not securities (e.g., BTC, ETH, certain memecoins and stablecoins), tokenized RWAs are often classified as securities if they meet the Howey Test. If so classified, the issuer must comply with federal and state securities laws, including the registration and disclosure requirements, unless one or more exemptions apply. The SEC issued a roadmap in April 2025 addressing how issuers of tokenized securities may meet those requirements. Hong Kong also adopts a bifurcated regulatory approach – tokenized RWAs and virtual assets that are classified as securities are regulated by the SFC, and those that are non-securities (including fiat-referenced stablecoins) are regulated by the Hong Kong Monetary Authority.

Depending on the asset type and jurisdiction(s), an issuer of tokenized RWAs may need to obtain one or more registrations or licenses in areas such as dealing in securities, money transmitting, crypto custody and/or fund management (this list is not exhaustive). Depending on the target investors’ profile (whether retail, accredited or institutional), an issuer also must manage an appropriate offering scheme (e.g., private securities offering under Regulation D), and implement anti-money laundering (AML) and know-your-customer (KYC) protocols as appropriate. Many of those compliance obligations are ongoing.

6. As an investor, how can one buy and sell tokenized RWAs?

The offering and sales of tokenized RWAs to retail investors are governed by the securities law of the relevant jurisdiction. Currently, many tokenized RWAs are not accessible by retail investors in the US due to securities law restrictions. For example, Blackrock’s tokenized money market fund – BUIDL – is open only to qualified purchasers and the minimum investment amount is US$5 million. Investors need to meet the eligibility threshold under the relevant securities law for the offering and to clear AML/KYC checks. Typically, a digital wallet is required for buying and selling tokenized RWAs, although the specifics, including whether one can purchase using fiat currency or stablecoins, may vary depending on the platform and jurisdiction.

7. Are tokenized RWAs freely transferrable?

Transferability and secondary markets of tokenized RWAs also are governed by the securities law applicable to the transfer and secondary sale of the underlying securities. Under the SEC rules, resale of securities acquired from unregistered sales commonly relies on the safe harbor under Rule 144, and the same safe harbor is available for resale of tokenized RWAs that are classified as securities. In addition, there has been a steady increase in the number of alternative trading systems (ATSs) for tokenized RWAs in the US market that offer private marketplaces for secondary resales and are regulated under Regulation ATS. In Hong Kong, certain types of tokenized financial products approved by the SFC for offering to retail investors (e.g., the ChinaAMC HKD digital money market fund) may be primarily distributed by SFC-licensed virtual asset trading platforms (VATPs), but no secondary trading market for such has been set up yet. Resale of tokenized securities are largely restricted.

Conclusion

Tokenized RWAs are reshaping the traditional financial landscape, offering new ways to unlock liquidity and broaden access to certain assets. As more players enter this space, firms are actively exploring and building viable use cases – and regulators are increasing open to creating regulatory and legal regimes to allow for this exploration – driving innovation and adoption.  While the regulatory terrain remains complex, understanding the fundamentals of what tokenized RWAs are and are not, is a crucial first step. We hope this brief Q&A has helped clarify some of the basics and sparked your curiosity about the future of tokenized RWAs.

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