Caixin: RWA Based on Hong Kong Assets Not Under the Jurisdiction of Mainland Chinese Regulatory Authorities

Odaily According to the joint release of the "Notice on Further Preventing and Disposing of Risks Related to Virtual Currency and Other Matters" (referred to as "Document No. 42") by eight departments including the People's Bank of China, the regulatory framework for mainland Chinese assets issuing Real World Assets (RWA) overseas has begun to take shape. The overall tone of Document No. 42 is a strict prohibition domestically and stringent regulation for overseas issuance.

According to sources familiar with regulatory matters, Hong Kong is one of the overseas issuance locations for RWA. RWA based on Hong Kong assets are not within the regulatory scope of Document No. 42 and are not the responsibility of mainland regulatory authorities. Currently, there are no RWA products based on underlying assets such as mainland securities or funds issued overseas in places like Hong Kong. If such products were to emerge, they would fall under the jurisdiction of the Institutional Department of the China Securities Regulatory Commission (CSRC). Furthermore, the previous stance was that "none were permitted at all." The current position is "not saying none are permitted," but there is strict regulation of mainland assets being used for overseas RWA issuance. There is no implication of "encouragement" in this; it must not be interpreted as "promoting development." (Caixin)