Guosen: RWA welcomes the era of strict supervision.

On February 6th, the People's Bank of China and eight other departments jointly issued a "Notice on Further Preventing and Dealing with Risks Related to Virtual Currency", while the China Securities Regulatory Commission issued "Regulatory Guidelines for the Domestic Assets Overseas Issuance of Asset-Backed Securities Tokens". Guosen released a research report stating that the "Guidelines" have established a clear regulatory framework for the domestic assets' overseas issuance of Asset-Backed Securities Tokens (RWA) for the first time. In the short term, it will promote the market clearing of non-compliant projects. In the long term, the "Guidelines" will lay the foundation for compliant development and attract mainstream traditional funds. The bank believes that the new regulations will bring clear business opportunities for investment banks with cross-border securitization experience, but will also require higher compliance risk control capabilities from participating institutions, leading to increased compliance costs. Institutions familiar with traditional finance and blockchain technology, and possessing composite talents, will have a competitive advantage. Guosen's main points are as follows: 1. Summary of the core content of the policy: Building a regulatory framework centered around the "filing system" The "Guidelines" released this time are the first systematic response from Chinese regulatory authorities to the financial innovation of domestic assets being securitized and tokenized overseas. The core points can be summarized in three aspects: 1. Clear definition and scope of application. The "Guidelines" clearly define the concept of "domestic assets overseas issuance of asset-backed securities tokens", which is the activity of issuing tokenized equity certificates overseas using domestic asset cash flow support, utilizing encryption and distributed ledger technology. This clarifies the regulatory targets and brings RWA tokenization under the securities regulation. 2. Establishing the core of the "filing system" management. This is the most core mechanism of the "Guidelines". It requires the domestic entity that controls the underlying assets ("domestic filing entity") to file with the China Securities Regulatory Commission and submit a complete set of materials before conducting business. The Commission will review the materials and file complete and compliant materials and disclose them, while non-compliant materials will not be filed. 3. Establishing a negative list and continuous regulatory requirements. Article 3 of the "Guidelines" details six situations in which related businesses cannot be conducted, including national security risks, serious violations of laws and regulations by the entities, ownership disputes of underlying assets, etc., setting clear "red lines" for market participants. At the same time, it requires the filing entity to fulfill post-issuance reporting obligations in the event of completion of issuance, significant risks occurring, etc., and emphasizes cross-border regulatory cooperation, forming a full-chain regulatory thinking of before, during, and after the event. 2. Impact on RWA business: A watershed from "barbaric growth" to "compliant competition" The "Guidelines" have a milestone significance for the nascent RWA business in China, with far-reaching implications. Short-term market clearance and uncertainty elimination. In the short term, some projects attempting to play on the edge, with poor qualifications or compliance risks, will be forced out of the market, and market activity may be temporarily suppressed. However, clear rules indicate the direction for institutions with willingness and capabilities, avoiding the extreme risk of "one-size-fits-all" policies. Establishing the foundation for compliant development in the long term, attracting mainstream traditional funds. In the long term, the "Guidelines" have laid the foundation for the sustainable development of RWA business. A successful filing and publication is equivalent to obtaining implicit endorsement from regulators, greatly enhancing the confidence of overseas investors. This will help attract mainstream funds such as traditional financial institutions and asset management companies that were originally hesitant about RWA, bringing incremental funds and a more stable development ecosystem to the industry. Business model guiding "assets first" and "compliance first". Under policy guidance, the core competitiveness of the business will return to the quality of assets themselves and compliance capabilities. Institutions that can explore and integrate high-quality underlying assets (such as trade receivables, lease assets, compliant real estate, etc.) and have strong compliance filing and information disclosure capabilities will stand out. Market competition will shift from simple technical and conceptual speculation to comprehensive strength competition in asset selection, structural design, and compliant operations. 3. Impact on relevant financial institutions: Opportunities and challenges coexist Investment banks and securitization service providers will have new core business lines, and investment banks with cross-border securitization experience will directly benefit. They can provide one-stop services for companies from underlying asset construction and issuance structure design to filing with the regulatory authorities. This business is expected to become a new growth point for their asset securitization business. For securities international subsidiaries, their advantage in connecting domestic assets with overseas issuance channels will be more prominent. Financial technology and compliance technology companies welcome new markets. There will be a demand for technology solutions such as information disclosure, evidence preservation, and compliance monitoring for RWA business. Technology companies that can provide compliance, transparency, and efficient data management systems based on blockchain will find important applications. Compliance costs and barriers of professional talents are the main challenges. For participants, the main challenges are the rising compliance costs and the scarcity of composite talents. Establishing a compliance and risk control system that meets the dual requirements of domestic filing and overseas issuance will require a significant investment of resources. Furthermore, composite talents who understand traditional securitization, blockchain technology, and cross-border regulations will become scarce resources that the market will compete for.