Caixin Analysis: RWA Based on Hong Kong Assets Not Regulated by Mainland Authorities

Background of the No. 42 Document

Recently, eight Chinese authorities, including the People's Bank of China, jointly issued the 'Notice on Further Preventing and Addressing Risks Related to Virtual Currency' (known as the 'No. 42 Document'), which outlines an initial regulatory framework for RWA (Recognizable Web Assets) issued overseas using mainland assets. The document makes it clear that such activities are strictly prohibited within China but will face tightened oversight when conducted abroad.

Regulatory Status of RWA in Hong Kong

According to insiders familiar with the regulatory landscape, Hong Kong serves as one of the offshore issuing locations for RWA. RWAs backed by Hong Kong-based assets fall outside the scope of the No. 42 Document and are not subject to regulation by mainland authorities. At present, there are no RWAs backed by mainland securities or funds issued in Hong Kong or other offshore markets. If such products emerge, they will come under the supervision of the China Securities Regulatory Commission (CSRC).

Policy Tone: Control, Not Encouragement

Regulators emphasized that the No. 42 Document does not signal encouragement, nor should it be interpreted as promoting RWA development. Previously, the mainland's stance was a complete ban on such assets. Although the current policy is not entirely prohibitive, strict regulation still applies to RWA involving mainland assets issued overseas, aiming to prevent financial risks from spilling over.