Zheshang: RWA brings regulatory challenges or may temporarily lead to the expansion of US dollar credit.

Zheshang released a research report stating that the macro impact of RWA is still to build a "global capital market" on the blockchain, accelerating the substitution of on-chain finance for traditional finance, which may temporarily lead to further expansion of US dollar credit. RWA, stablecoins, and decentralized finance (smart contracts) mirror corresponding investment targets, fiat currencies, and financial intermediary functions in the traditional financial system on the blockchain. The three work together to form a new financial ecosystem on the blockchain. In the long run, the mechanism of RWA on the chain is a potential challenge to traditional financial institutions, including banks, securities firms, insurance companies, and exchanges. Key points from Zheshang: RWA is "Tokenization of Real-World Assets" RWA (Real-World Assets) refers to tokenizing ownership of real assets (such as real estate, securities, art, etc., assets whose value does not depend on the blockchain network) on the blockchain. The value of RWA tokens on the chain is linked to the value of "real" assets. The difference between RWA and stablecoins is that stablecoins are pegged to fiat currencies in the real world, corresponding to on-chain transaction media, while RWAs are pegged to various valuable assets in the real world, corresponding to on-chain "investment targets." RWA mainly establishes legal entities to hold "real assets" and issue on-chain "ownership" certificates corresponding to them, anchoring the value of the digital currency issued and the "real assets." RWA can be linked to a wider range of "real assets," classified by asset type into tangible assets, financial assets, and intangible assets. Currently, RWA is still in the early stages of development, with a large proportion of projects mainly focused on government bonds, gold, and mortgage loans. However, there is enormous potential for direct financing through RWA in the future. RWA can be divided into investment-oriented and financing-oriented types. The former mainly involves transferring government bonds, stocks, gold, and other financial assets circulating in the secondary market to the chain for "secondary circulation," with real assets endorsing the value on-chain. The latter refers to direct financing in the digital currency market, such as on-chain real estate mortgage loans and on-chain enterprise equipment, mainly providing a global, low-threshold, and efficient financing channel for low-liquidity projects through blockchain technology. From the current practice, U.S. government bonds, existing U.S. stocks, and gold on-chain are the main focus of investment-oriented RWA, with examples being the $2.8 billion U.S. bonds on-chain by BlackRock's BUIDL, $900 million gold on-chain by Paxos Gold, and around $300 million U.S. stocks on-chain by EXOD. Financing-oriented RWA projects mainly involve mortgage loans, including real estate mortgage loans and institutional mortgage loans, such as Figure's home equity line of credit (HELOC) project with a financing size of approximately $11.1 billion, accounting for about 43% of the total RWA size; Tradable or MAPLE's institutional guaranteed loans with financing sizes of approximately $2.1 billion and $1.1 billion respectively, while other direct financing projects, such as Propy (tokenized real estate) with a financing size of approximately $0.5 billion, and Ant Financial packaging Antelope Technologies' charging stations, GCL Energy Technology's photovoltaic power plants, and other high-quality assets on-chain with financing sizes of approximately $0.1 billion and $0.3 billion respectively, have relatively smaller overall sizes. In the future, RWA will provide direct financing channels, and there is tremendous potential for RWA to provide financing channels for non-standard assets such as enterprise equipment, art, intellectual property, etc. The market size of key RWA assets is approximately $25.7 billion As of July 13, 2025, the RWA market size reached $25.7 billion. From the perspective of the classification of tangible assets, financial assets, and intangible assets, the current total size of tangible assets (commodities, real estate) RWA is $1.87 billion, accounting for 7.3% of the RWA size, while the total size of financial assets (government bonds, stocks, credit) RWA is $23.83 billion, accounting for 92.7%. The overall size of intangible assets is currently small. Specific breakdown is as follows: In tangible assets, commodities account for $16.3 billion, representing 6.3% of the total RWA size; Real estate is approximately $2.4 billion, representing 0.9% of the total RWA size; In financial assets, private credit is $14.9 billion, representing 57.9% of the total RWA size; U.S. government bonds are approximately $7.54 billion, representing 29.3% of the total RWA size, while non-U.S. government bonds are approximately $2.8 billion, representing 1.1%. Stocks are approximately $4.3 billion, representing 1.7% of the total RWA size; Institutional funds including private equity, hedge funds, venture capital, and similar investment tools have a size of $6.9 billion, representing 2.7% of the total RWA size. RWA poses regulatory challenges and may temporarily lead to the expansion of U.S. dollar credit From an investment perspective, RWA can be divided into investment-oriented and financing-oriented types. Investment-oriented RWA uses real assets to provide value support for on-chain funds, with representative projects such as government bonds, stocks, and gold RWAs. Financing-oriented RWA, on the other hand, opens up global, efficient, and low-threshold financing channels for illiquid assets through blockchain technology, with representative projects such as real estate, equipment, and credit RWAs. The bank believes that the macro impact of RWA lies in building a "global capital market" on the blockchain, accelerating the substitution of on-chain finance for traditional finance, which may temporarily lead to further expansion of U.S. dollar credit. RWA, stablecoins, and decentralized finance (smart contracts) mirror corresponding investment targets, fiat currencies, and financial intermediary functions in the traditional financial system on the blockchain. The three work together to form a new financial ecosystem on the blockchain. In the long run, the mechanism of RWA on the chain poses a potential challenge to traditional financial institutions, including banks, securities firms, insurance companies, and exchanges. The rapid development of RWA may temporarily lead to the expansion of U.S. dollar credit. First, from the current issuance of RWA, most RWA assets are denominated in U.S. dollars. Second, the capital account controls in the U.S. are more relaxed compared to other countries, especially emerging economies, resulting in lower regulatory pressure. Finally, since April 2024, private capital from overseas has shown a net inflow into the U.S. capital markets, with a net inflow of $1.46 trillion over the past 12 months, indicating that private sector demand for U.S. assets remains strong. Risk Warning: Geopolitical tensions between China and the U.S. may exceed expectations, and regulatory changes in the RWA environment may also exceed expectations.