### Core Value As a key trend in the integration of traditional financial assets and blockchain technology, RWA tokenization enhances asset liquidity and transparency, enables fractional ownership and programmable settlement, covers a wide range of asset types including real estate, gold, government bonds, and corporate bonds, and helps reshape market structure and reduce counterparty risk. ### Global Landscape As of 2025, the on-chain asset scale of RWA has surpassed $25 billion, expanding rapidly in fields such as institutional trials and tokenized funds. However, liquidity remains a core constraint, stemming from stringent regulatory thresholds, centralized custody, accredited investor white list mechanisms, and the lack of efficient decentralized trading venues. ### Regulatory Outlook The international regulatory landscape is divided. The Monetary Authority of Singapore (MAS) is promoting commercialization through *Project Guardian*. The Hong Kong Securities and Futures Commission (SFC) and Hong Kong Monetary Authority (HKMA) have issued phased guidelines; some regions follow existing legal frameworks, emphasizing that "tokenized securities still qualify as securities," which increases compliance costs. The industry calls for unified federal regulation to eliminate uncertainty and unlock liquidity. ### Institutional Participation Traditional finance (TradFi) giants are driving the mainstream adoption of RWA, with tokenized U.S. Treasuries being the most mature and largest product category currently. Over 119 issuers cover fields such as private credit and real estate. Asset management firms including BlackRock, Franklin Templeton, and WisdomTree have brought institutional credibility and market exposure. ### Financial Performance In Q3 2025, Franklin Resources (ticker: BEN) beat earnings per share (EPS) and revenue estimates by 2.08% and 29.56% respectively, with $1.61 trillion in assets under management (AUM). However, its pre-market share price dropped 6.38%, reflecting market concerns over costs and execution risks associated with its strategic transition into digital assets. BlackRock (BLK) and WisdomTree (WT) saw share prices rise a marginal 0.02% and 1.75% respectively, as the industry generally recognizes RWA as a next-generation growth driver. --- ### SEC Core Focus The U.S. Securities and Exchange Commission (SEC)'s core focus is whether RWA tokens qualify as "securities". If classified as such, they must comply with registration requirements or exemption provisions. The *Howey Test* (established in 1946) is the core framework for determining whether a token constitutes an "investment contract" (a security), with four prongs: the investment of money, in a common enterprise, with an expectation of profits, and profits derived from the efforts of others. The SEC and court rulings such as the *Barry case* have emphasized the validity of this test, with the "efforts of others" being the greatest challenge for RWA projects. If the operational and management activities of the issuer/administrator drive project profitability—such as tenant recruitment and property maintenance in tokenized real estate—the tokens are likely to be classified as securities. Most high-value RWA require active management, so issuers typically must acknowledge their securities classification. --- ### Reg D Rule 506 Series #### Rule 506 (b) (Traditional Private Placement) Allows issuance to an unlimited number of accredited investors and up to 35 non-accredited investors, prohibits general solicitation (public advertising), and requires accredited investors to self-certify via a questionnaire. #### Rule 506 (c) (Public Private Placement) Permits public advertising and general solicitation, but is only available to accredited investors, requiring stricter identity verification and enhanced due diligence. Both pathways require filing a Form D with the SEC within 15 days of the first sale, and the issued RWA tokens will be restricted securities (with resale limitations). Rule 506(c) is more suitable for projects seeking to quickly raise capital from institutional or high-net-worth investors. --- ### Regulation A+ (Mini-IPO) Similar to a "mini-IPO", this framework is designed for issuers looking to expand access to retail investors and enable fractional ownership, with two tiers: 1. **Tier 1**: Allows up to $20 million in fundraising over 12 months, no audited financial statements required, but subject to state blue sky laws, making cross-state offerings complex. 2. **Tier 2**: Allows up to $75 million in fundraising over 12 months, requires audited financial statements and ongoing periodic reporting, with federal law preempting state blue sky laws, but non-accredited investors are limited to purchasing no more than 10% of their annual income or net worth. Tier 2 is the primary pathway for achieving broad accessibility for RWA, but carries high compliance costs. High-value, institution-focused RWA projects tend to opt for the lower-cost Reg D 506(c). --- ### Regulation S Regulation S provides a registration exemption for RWA projects offering tokens to non-U.S. persons outside the United States, and requires "guardrail measures" such as holding periods and resale restrictions to prevent tokens from being reintroduced into the U.S. market. Blockchain technology can automate geographic restrictions and resale locks via smart contracts, improving compliance efficiency and reliability. --- ### Secondary Market Regulation The SEC has extended its oversight to RWA secondary markets, focusing on trading venue compliance and customer asset protection for intermediaries. If RWA tokens are classified as securities, secondary market trading in the U.S. must occur on regulated venues, with most platforms required to register as Alternative Trading Systems (ATS). ATS platforms meet the definition of an "exchange" but are exempt from registering as national securities exchanges under Regulation ATS; operators must first register as broker-dealers (BDs) and submit an initial operating report. This requirement ensures auditable trading and market surveillance, but conflicts with the permissionless, peer-to-peer model of decentralized finance (DeFi), limiting RWA liquidity. --- ### Broker-Dealer and Custody Rules Broker-dealers (BDs) are core intermediaries for RWA securities trading, required to register with the SEC and the Financial Industry Regulatory Authority (FINRA), and comply with the net capital rule (Rule 15c3-1) and customer protection rule (Rule 15c3-3) under the Securities Exchange Act to ensure financial stability and customer asset safety. Rule 15c3-3 requires BDs to establish and maintain "physical possession or control" over customer "fully paid and excess margin securities". Traditional interpretations are based on tangible assets or securities certificates, but "control" for RWA tokens relies on private key custody. Proving that private key custody equals "physical possession or control" is a structural challenge; failure to meet this standard prevents legal custody. In 2020, the SEC introduced temporary relief allowing eligible Special Purpose Broker-Dealers (SPBDs) to avoid enforcement actions if they reasonably determine they have "physical possession or control". SPBDs must meet requirements including limiting operations to digital asset securities, establishing risk management policies, and providing full risk disclosures. The temporary relief, which took effect in December 2020, will expire by the end of 2025 or early 2026, creating a "compliance cliff" risk. The SEC has initiated revisions to Rule 15c3-3, such as requiring daily reserve calculations, and the market urgently needs permanent, clear digital asset custody rules to maintain market access and institutional confidence. --- ### FinCEN AML/CFT and Travel Rule U.S. RWA platforms must comply with Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) requirements set forth by the Financial Crimes Enforcement Network (FinCEN) under the Bank Secrecy Act (BSA). RWA platforms involving fund or virtual currency transfers are likely to be classified as Money Services Businesses (MSBs), particularly money transmitters. FinCEN has clarified that money transmission services cover all cryptocurrencies, and since RWA tokens represent the value of underlying assets, related platforms almost certainly fall under MSB regulatory oversight. MSB owners/controllers must register with the U.S. Department of the Treasury via FinCEN Form 107 within 180 days of launching operations, and renew registration every two years. Late registration carries civil and criminal penalties. MSBs must establish comprehensive written AML/CFT compliance programs, including internal controls, independent compliance testing, and designated compliance officers. KYC processes require strict verification of both parties to a transaction, with enhanced due diligence (EDD) required for institutional investors and cross-border large-value transactions. Platforms must continuously monitor transactions, file Suspicious Activity Reports (SARs) with FinCEN per BSA requirements, and retain transaction records for at least five years for regulatory review. If RWA token transactions qualify as "fund transfers" with a value of $3,000 or more, the Travel Rule applies: as a Virtual Asset Service Provider (VASP), platforms must transmit the identity information (name, account number, transaction details) of the originator (sender) and beneficiary (recipient) to the receiving financial institution. The Travel Rule cannot be fully automated via smart contracts alone; platforms must implement permissioned layers or whitelisting, perform identity verification and due diligence off-chain, and map results on-chain. This weakens RWA’s decentralized, permissionless characteristics and concentrates custody and liquidity with regulated entities. --- ### DAO Compliance Compliance liability for MSB and BSA requirements for RWA DAOs is complex. FinCEN has stated that "managers" and "traders" of virtual currencies qualify as MSBs. Regulators may pierce the DAO’s corporate veil, identifying entities or individuals controlling core functions such as the legal link between underlying assets and tokens, or multi-sig wallet management as "managers", and forcing them to fulfill MSB registration, AML, and Travel Rule obligations. --- ### Multi-Agency U.S. Regulatory Framework U.S. RWA regulation involves multi-agency coordination, with the Office of the Comptroller of the Currency (OCC) and Commodity Futures Trading Commission (CFTC) playing key roles. The OCC regulates federally chartered banks. In 2025, it withdrew a joint statement on crypto asset risks, reducing compliance burdens for banks engaging in crypto-related activities and encouraging banks to explore RWA token custody and trading services. The OCC’s policy shift has advanced RWA market maturation: if banks are approved to custody RWA assets, they can provide solutions compliant with Rule 15c3-3, resolving the "custody and control" challenge and boosting institutional investor confidence, RWA liquidity, and market adoption. Tokenized commodities such as gold and agricultural products may fall under CFTC jurisdiction, which focuses on execution aspects. If a project uses "indirect tokenization" (tokens representing equity in a legal entity that holds commodities), technical, corporate, and contractual arrangements must be analyzed. Even if the underlying asset is a commodity, if the token meets the investment contract criteria of the Howey Test, it may still be classified as a security, facing dual scrutiny from the SEC and CFTC. The industry urgently needs a unified, predictable federal regulatory framework. The current fragmented regulatory requirements—with the SEC overseeing issuance and trading, FinCEN overseeing AML, and the OCC overseeing bank access—hinders innovation. --- ### Future Regulatory Focus Future regulatory efforts will focus on three areas: 1. Clarifying digital asset operating licenses for intermediaries (BDs, ATS platforms, and banks) to resolve permanent Rule 15c3-3 issues; 2. Aligning domestic AML/KYC requirements with global standards such as those from the Financial Action Task Force (FATF); 3. Ensuring enforceable links between the legal rights of underlying assets and on-chain token rights (legal structure design is more critical than blockchain technology selection). --- ### Dual Compliance Pressures The current RWA market is in a compliance-driven transition phase, and issuers and participants must acknowledge the reality that most RWA tokens are securities, and address complex regulation through precise legal structure design. Dual compliance pressures: 1. **SEC Front**: Issuers must classify the securities status of their assets, select issuance pathways such as Reg D or Reg A+ Tier 2, ensure secondary market trading occurs on compliant platforms, and urgently resolve custody issues following the expiration of SPBD temporary relief (the OCC’s policy shift presents opportunities for bank involvement); 2. **FinCEN Front**: Platforms almost certainly qualify as MSBs, requiring full implementation of AML/KYC and the Travel Rule, and adopting permissioned technical models that sacrifice some decentralized characteristics. ### Conclusion Future RWA growth depends on traditional financial giants’ participation and consistent federal regulation. Only by grounding technological innovation in solid legal and regulatory foundations can market participants overcome regulatory barriers and unlock liquidity potential. --- © 2021 Meishun (Hong Kong) Management Consulting Co., Ltd., Meishun (Hangzhou) Management Consulting Co., Ltd. All rights reserved. Meishun Meiyin (Hangzhou) Consulting Management Co., Ltd. is a domestic subsidiary of Hong Kong Meishun Management Consulting Co., Ltd. under the same ultimate controlling party. Both companies are under the same Chinese management and comply with Hong Kong and domestic laws.