TechFlow News reports that on February 21, Caixin published an article titled “Strict Oversight of Offshore RWAs,” stating that “strict oversight of offshore activities” is the overarching principle set forth in Circular No. 42, “Notice on Further Preventing and Addressing Risks Related to Virtual Assets and Other Matters.” Hong Kong is one of the offshore jurisdictions for RWA issuance. According to regulatory insiders familiar with the matter, RWAs backed by assets located in China’s Hong Kong Special Administrative Region fall outside the scope of regulation under Circular No. 42 and are not subject to supervision by mainland regulators. Currently, there are no RWAs issued offshore—e.g., in Hong Kong—whose underlying assets consist of mainland-issued securities or funds. Should such RWAs emerge, they would fall under the jurisdiction of the Institutional Department of the China Securities Regulatory Commission (CSRC). Furthermore, “previously, all such activities were outright prohibited. Now, while it is not stated that ‘all are prohibited,’ strict regulation applies to RWAs involving the outbound transfer of mainland-based assets. This does not imply ‘encouragement’—it must absolutely not be interpreted as ‘promoting development’ or ‘ramping up activity rapidly.’ Rather, the guiding principle remains ‘strict regulation.’”
According to additional information obtained by Caixin, over the weekend when Circular No. 42 was released, China International Capital Corporation (CICC) Hong Kong already had teams engaging with major public blockchains and exchanges to explore potential business collaboration opportunities. Some public blockchain executives have also expressed their desire to partner with investment banks and other intermediaries to jointly explore business opportunities. Both Ant Group and JD.com have indicated they are closely monitoring the policy developments.
