Document No. 42 Breakthrough: The Compliance Path and Value Capture for Chinese Assets RWA Going Global

Compilation | Wu Talks Blockchain

Guest lineup:

Yao Shijia, Co-Chief Analyst at Guotai Haitong Securities Industry Policy Research Institute

Qiao Zheyuan, Head of Virtual Asset Business Department and Partner at JunHe Law Firm

Zhao Yao, Distinguished Senior Researcher at the National Financial and Development Laboratory

Chen Bin, General Manager of Wanxiang Blockchain

Zhao Ying, Partner at King & Wood Mallesons Law Firm

Source: 2026 Hong Kong Web3 Carnival

TL;DR: Core points on China assets’ RWA regulatory logic and overseas expansion

· Clarifying policy logic: “Document No. 42” is not a complete blockade but effectively connects with early risk warnings. Regulators strictly distinguish RWA (financing tools) from stablecoins (payment tools) in qualitative terms, clarifying compliant overseas pathways for ABS-like, equity-like, and pure foreign debt credit tokenization.

· Hong Kong’s strategic hub position: Clear multi-ministry filing procedures for domestic assets to be issued abroad. With mature compliant frameworks for tokenized securities and comprehensive issuance and distribution systems like No. 1 License and VATP, Hong Kong naturally has channel advantages for landing Chinese RWA assets.

· From standard assets to “twin digital assets”: Industry consensus holds that the true value of RWA lies not only in packaging traditional financial products (like money market funds) but also in leveraging IoT and oracle technologies to track the full lifecycle data of China’s advantageous industries such as power, new energy, and more.

· Overseas expansion under great power competition: In the current macro context, “twin digital assets” rooted in China’s technological innovation drive show unique vitality. These tech assets with 24/7 trading features are expected to attract global liquidity, support the real economy, and promote RMB internationalization.

· Core conclusion: The compliant gateway for Chinese assets to go overseas via RWA is now open. The immediate task is to promote the first batch of compliant projects through the full process, with a long-term vision of forming broad consensus and value recognition among global investors similar to “Panda Bonds.”

“Document No. 42” Policy Interpretation and Regulatory Logic

Yao Shijia: Welcome everyone to this roundtable. The theme today is the opportunities and compliance challenges for Chinese assets going overseas via RWA. We’ve invited JunHe lawyer Zheyuan Qiao, lawyer Ying Zhao, Dr. Yao Zhao, and General Manager Chen Bin for in-depth discussion.

The first topic everyone cares about is policy, especially after the release of “Document No. 42” earlier this year. Interpretations vary widely. Some say “No. 42” officially opens the door for RWA; others believe it leaves only a small gap, effectively restricting RWA. I’d like to ask everyone’s views on this?

First, let’s have King & Wood lawyer Ying Zhao interpret it for us. As one of the main contributors to policy formulation, what is your view on the regulatory logic and policy?

Ying Zhao: “Document No. 42” was issued in February this year. Before that, in December last year, seven industry associations including the China Internet Finance Association issued a “Risk Warning,” which for the first time mentioned the concept of real-world asset tokenization, highlighting several risks and prohibited activities. Based on that, “No. 42” was issued in February. Before the document, many asked me whether it was contradictory—December’s warning said not to do, February’s document seemed to allow it. But in fact, these two are transitional and connected, not conflicting.

The December “Risk Warning” discussed risks of real-world asset tokenization, emphasizing two prohibitions: first, domestic institutions and individuals cannot conduct such activities domestically; second, overseas institutions cannot provide related services within China. It clearly states that domestic entities and assets cannot go abroad for issuance, but it did not address whether domestic subjects and assets can be issued overseas. This gap was filled by “No. 42.” It explicitly states that domestic entities’ assets can, with regulatory approval, be issued abroad in three types of tokenized products: ABS-like tokenization, equity tokenization, and pure foreign debt credit tokenization.

This shows it’s not a contradiction—December’s prohibition on domestic activities and February’s opening for compliant overseas issuance are different regulations. The former bans domestic tokenization activities related to domestic assets, while the latter permits domestic assets to be issued abroad through compliant channels.

What’s the underlying logic? “No. 42” mentions stablecoins, stating that without approval from relevant authorities, no overseas institution may issue RMB-pegged stablecoins abroad, nor are they allowed domestically. So, stablecoins currently seem restricted.

Many think that since these are tokenized assets backed by underlying assets, RWA should have similar clarifications. But it’s important to clarify: stablecoins and RWA, although both are tokenization products, are fundamentally different. Stablecoins pegged to fiat currency serve a monetary function, effectively replacing sovereign currency, which is why “No. 42” states they require approval. They are classified as payment tools, with functions similar to sovereign currency. In contrast, underlying assets like physical assets or other types of RWA are financing tools, comparable to bonds or equities. According to regulatory principles, they should be overseen by traditional financial regulators—CSRC, NDRC, SAFE—responsible for securities, bonds, and foreign debt respectively.

This explains the different regulatory logic for stablecoins and virtual currencies, and the division of responsibilities within financial regulators.

Yao Shijia: Thank you, Lawyer Ying Zhao. Now, let’s invite Zhao Yao from the National Financial and Development Laboratory. With practical banking experience and academic background, how do you view the new regulations?

Yao Zhao: Thank you, everyone. Just a brief, straightforward perspective. Zhao Ying’s comprehensive and accurate policy interpretation just now is very helpful. During our policy research last year, we offered some small suggestions on the accuracy and legality of academic terminology.

First, “No. 42” mainly targets tokenization. Although it’s called Tokenization in English, in the international context, Tokenization has various meanings: one is currency tokenization, second is electronic payment tokenization, third is also used in crypto for tokenization. The same term can mean different things depending on context.

“No. 42” opposes currency tokenization—specifically, development toward a currency-like function or replacing legal tender. The core premise of legal currency is the accounting function (unit of account). Central banks are very cautious about currency tokenization; for example, in 2019, the US opposed Libra.

RWA uses tokenization technology, but it does not serve a currency function; instead, it functions as an asset and store of value, a financial product. Chinese regulators have always been rigorous. The phrase “name not right, speech not smooth” from the historical text emphasizes that “No. 42” opposes currency tokenization but does not oppose asset on-chain. Currently, official Chinese terminology is shifting toward tokenization.

For example, securities or certificates on-chain can be tokenized, but not called tokenization in the sense of currency. Whether in practice or academic research, especially in Chinese, distinctions are necessary. Just as early crypto currency was a colloquial term, internationally we now prefer “Crypto Asset”—one is currency, the other is asset, with very different legal attributes, functions, and audiences, leading to different regulatory frameworks.

Filing procedures, Hong Kong opportunities, and industry benefits

Yao Shijia: Thanks, Zhao Ying and Zhao Yao, for clarifying the separation between monetary functions and asset attributes from a regulatory perspective. Now, let’s ask JunHe partner Zhao Zheyuan: as someone involved in many benchmark projects, how do you view “No. 42” in practical project screening? What can be done, what cannot?

Zhao Zheyuan: I think after the release of “No. 42” and the guidelines for domestic asset tokenization, the biggest difference is that previously, projects based on domestic assets lacked clear filing procedures; but now, with these two documents, there are very clear and specific compliance filing processes.

According to “No. 42,” if a domestic institution wants to issue tokens—even if abroad—it must obtain approval from SAFE, NDRC, and CSRC. The process involves submitting a filing report, comprehensive foreign issuance documents, qualification info of domestic entities, and details of domestic assets. Intermediaries involved must ensure the accuracy of the filing info. This process is mandatory for domestic asset tokenization.

For foreign asset tokenization, the process is similar but generally does not require domestic approval. The only caveat is if foreign financial institutions’ subsidiaries are involved, they may need to be integrated into domestic compliance and risk control systems.

Overall, this creates opportunities for Hong Kong. Future projects based on domestic assets as underlying can be compliantly issued in Hong Kong, which has a full set of tokenization security compliance procedures (under SFC licensing and circulars). Hong Kong’s well-established No. 1 License and VATP distribution system can leverage traditional financial channels for PB products, DCM, funds, and compliant exchanges, helping attract overseas investors to Chinese assets.

Yao Shijia: Thanks, Zhao Zheyuan. Lastly, let’s ask Wanxiang’s Chen Bin: as an early ecosystem builder, what are your views on “No. 42” and the overall opportunities and challenges it brings to the industry?

Chen Bin: I’d say “No. 42” came at a timely moment and is very positive for the industry. Dr. Yao Zhao and Lawyer Ying Zhao mentioned the importance of precise wording—“No. 42” first officially links token and tokenization in regulatory language. Industry-wise, native tokens (coins) on public chains and other tokens issued there are called tokens; on-chain asset representation is called tokenization, which is globally recognized.

This year, the terminology is especially interesting: domestically, “tokenization” was often viewed negatively, as if tokens were bad. But “No. 42” officially adopted the term “tokenization” aligned with international standards, which is very good.

Since 2017, China has seen two distinct tracks: one is the “blockchain circle,” focusing on consortium chains without token functions, purely technical infrastructure; the other is the realization that blockchain’s core value includes tokens, payments, settlement, and circulation. Despite heavy investment in consortium chain infrastructure, commercial applications have been limited because blockchain’s real value lies in tokens and liquidity. The “No. 42” clarifies that tokenization in specific fields is compliant and legal, providing a good regulatory framework and expectations—very positive for the industry.

Asset screening: what Chinese assets are suitable for going overseas?

Yao Shijia: Having discussed the rules, I believe everyone now has a clearer understanding of regulatory thinking. Let’s talk about assets—since the theme is Chinese assets going overseas via RWA. Currently, the RWA industry faces issues like scarcity of high-quality issuers and innovative products, challenges in property rights confirmation, and the backdrop of great power competition. What kinds of Chinese assets are suitable for RWA overseas? Let’s ask Lawyer Zheyuan Qiao: in your practical screening, what types of Chinese assets do you favor?

Qiao Zheyuan: Over the past four or five years, our team has completed over ten tokenization projects, covering assets like gold, gold mines, US debt funds, consumer loans, stocks, bonds, and funds. I believe there’s no fixed standard that says which asset is best; ultimately, it’s about protecting investors and their interests. The goal is to create attractive financial products—relatively low risk, high yield, clear ownership, and assets recognized broadly with good liquidity.

In terms of design, complexity isn’t necessarily better; if a scheme is too complicated or opaque, it’s unlikely to succeed. We look for clear ownership, no serious legal obstacles that could cause losses to investors. Under these conditions, structures should aim for high returns, low business and legal risks, and good token liquidity. Ideally, tokens could also improve capital efficiency, support staking, and better integrate with Web3, meeting these criteria makes for a good project.

Yao Shijia: I’d like Wanxiang’s Chen Bin to share—do you have screening standards or rankings internally?

Chen Bin: From a financial product perspective, the criteria are similar: clear ownership and stable returns. Currently, products like ETFs and money market funds are standard financial products, easier to scale.

But for true RWA, besides traditional financial paths, on-chain native approaches are also possible. In traditional finance, financialized assets are separated from the underlying assets by several layers; on-chain investors prefer to know exactly what the underlying assets are and whether they can be tracked.

Some native assets, like computing power or new energy assets, can use IoT tech to collect data at every revenue-generating step, placing trusted data on regulatory chains or consortium chains, while issuing tokens on public chains. Through oracle mechanisms, the asset’s state and income can be monitored in real-time. These assets are more distinctive long-term and easier for regulators to accept.

The ability to track RWA assets with technology is a major difference from traditional financial products. From first principles, using new tech to track underlying assets fundamentally changes the asset packaging mode of traditional intermediaries. I believe such assets are where RWA’s future value lies.

Yao Shijia: Thanks, Chen Bin, for your characteristic Wanxiang perspective—using technology to enhance traceability. Now, let’s ask King & Wood lawyer Zhao Ying: what types of assets are more aligned with regulatory preferences and frameworks?

Zhao Ying: I very much agree with Chen Bin’s view. Assets that can naturally leverage blockchain’s distributed data collection and on-chain recording are very suitable for RWA. Previously, assets were centralized and easier to package and issue; distributed assets on blockchain and RWA will have greater advantages.

From a regulatory perspective, aside from negative lists excluding non-compliant, unclear ownership, or illegal entities, in the short term, regulators prefer assets with good qualification and strong credit, as they pose lower risks.

Logically, the currently relaxed guidelines are for ABS tokenization—assets that meet issuance conditions can be tokenized. The two main requirements are: first, stable and predictable cash flows; second, real sale and asset risk isolation. If equity-like RWA is further relaxed, regulators will still expect clear cash flows and profit models, and transparency to investors and regulators about the business.

Yao Shijia: Thanks, Zhao Ying, for clarifying the negative list and providing clear signals. Lastly, Dr. Yao Zhao, if we compare China’s assets globally, where are our advantages?

Yao Zhao: Last year, we did a historical study comparing the US intellectual property share index in the 1970s with the dollar index, finding a strong positive correlation. Data shows that technology plays a dominant role in dollar hegemony.

What’s the best path for RMB internationalization? Currently, technology is the most feasible. After DeepSeek’s launch, global investors have shown strong interest in China’s tech and RMB-denominated assets.

If we divide digital assets into two categories—native digital assets and twin digital assets—for RWA, twin digital assets are very good trading categories, like charging stations, AI, and fields combining AI and Web3. As these sectors deepen integration with the real economy, twin digital assets will show strong vitality, rooted in China’s technological innovation.

For traditional assets already ABSed, doing RWA should avoid “using a hammer to find nails”—leveraging traceable on-chain tech and 24/7 trading features. If tech-strong equity assets can trade 24/7, they could attract global liquidity and accelerate tech industry development.

Implementation Path and Industry Outlook

Yao Shijia: After discussing assets, let’s briefly talk about pathways. Lawyer Zhao Ying, what kind of settlement and clearing paths are more compliant? Using CBDC, international stablecoins, or fiat?

Zhao Ying: According to “No. 42,” the overall process involves two stages: domestic and overseas. Domestically, it’s mainly about asset screening, rights confirmation, due diligence, auditing, and on-chain registration, then reporting to CSRC; after approval, the focus shifts to blockchain platform selection, token issuance, and setting up SPV abroad.

For settlement, since it’s overseas, as long as the method complies with local regulations, it’s feasible. Stablecoins, fiat, or tokenized deposits are all options. Ultimately, if funds are to be remitted back to China, it will be through traditional foreign exchange channels or via mBridge (multilateral central bank digital currency bridge) in fiat currency (RMB or other foreign currencies).

Yao Shijia: Thanks, Lawyer Zhao. Today’s forum has shown more opportunities than challenges. As a final quick question, in the next year, what are you most looking forward to regarding Chinese assets going overseas via RWA?

Qiao Zheyuan: I look forward to projects obtaining filing approval, seeing successful full-process cases, and gaining broad recognition from overseas investors.

Yao Zhao: From a financial market perspective, I hope to see safe assets supported by RWA on-chain, forming a foundational support for new financial markets.

Chen Bin: I think not just a year, but further ahead. Blockchain emphasizes consensus; I hope in the future, there can be a consensus on Chinese RWA assets, like the “Panda Bonds,” making Chinese assets widely accepted by global investors.

Zhao Ying: After normalizing business, I hope to see more Chinese assets issued in Hong Kong through compliant channels, attracting more international capital into Hong Kong, creating a virtuous cycle.

Yao Shijia: Thank you to all four guests. Today’s roundtable concludes here.