Web3 Lawyer Decodes: What kind of RWA does everyone understand?

Source: encryption salad

Recently, discussions about RWA projects have been heated in various Web3 communities. Industry observers often提出 the assertion that "RWA will reconstruct the new financial ecology of Hong Kong," believing that relying on the existing regulatory framework of the Hong Kong Special Administrative Region, this track will usher in breakthrough development. In the process of communication and discussion with colleagues, 加密沙律 found that everyone has been arguing about the so-called "compliance" issues, and their understanding of the question "what is compliance" varies greatly, resulting in a situation where each side has its own reasoning. The emergence of this phenomenon is actually based on the differences in understanding of the RWA concept.

Therefore, it is necessary for the encryption salad to discuss from the perspective of a professional legal team how the concept of RWA should be defined and to sort out the compliance red lines of RWA.

1. How should the concept of RWA be defined?

(1) Background and Advantages of RWA Projects

Currently, RWA is becoming the focus of market discussions and is gradually forming a new wave of development. This phenomenon is mainly based on the following two major backgrounds:

First, it is because the advantages of the token itself can make up for the shortcomings of traditional financing.

Traditional financial markets face long-standing issues such as high entry barriers, lengthy financing cycles, slow financing speeds, and complex exit mechanisms. However, token financing can effectively bypass these shortcomings. Compared to traditional IPOs, RWA has the following significant advantages:

1. Fast Financing Speed: Due to the circulation of tokens based on blockchain technology, which typically circulates through decentralized intermediary trading institutions, it avoids obstacles such as foreign capital access restrictions, industry policy constraints, and lock-up period requirements that traditional financial projects may encounter. At the same time, it can compress the review process that originally takes months or even years, greatly enhancing the financing rate.

2. Asset Diversification: Traditional IPOs have a single asset type, only supporting equity issuance, thus imposing strict requirements on the revenue stability, profitability, and asset-liability structure of the issuing entity. However, for RWA, the types of suitable assets are more diverse, encompassing various types of non-standard assets, which not only expands the range of financeable assets but also shifts the focus of credit assessment to the quality of the underlying assets, significantly lowering the qualification threshold for the issuing entity.

3. Relatively low financing costs: Traditional IPOs require long-term collaboration among multiple intermediaries such as investment banks, auditors, and law firms, with the total cost of the listing process reaching millions or even tens of millions. However, RWA issues tokens through decentralized exchanges, saving a significant amount on intermediary fees, while also utilizing smart contracts to eliminate another large portion of labor costs.

In summary, RWA has taken center stage in financing projects with its unique advantages, while the Web3 world and the cryptocurrency market particularly need funds and projects from the traditional real world. This has led to a situation where, whether looking to achieve substantial business transformation or simply wanting to ride the "wave" and gain attention, leading projects in the segmented fields of listed companies and various "quirky" startups at the grassroots level are actively exploring the potential applications of RWA.

Secondly, Hong Kong's "compliance" has added fuel to the heat.

In fact, the development of RWA overseas has been ongoing for some time. This wave of enthusiasm has surged because a series of regulatory innovations were passed in Hong Kong, and several benchmark projects were implemented, providing domestic investors with a compliant channel to participate in "RWA" for the first time. The "compliant" RWA that the Chinese can access has been realized. This groundbreaking progress has not only attracted native encryption assets but has also prompted traditional projects and funds to begin paying attention to the investment value of RWA, ultimately driving market enthusiasm to new heights.

However, do users who want to experience RWA really understand what RWA is? There are various RWA projects, with a wide range of underlying assets and operational structures. Can everyone distinguish their differences? Therefore, we believe it is necessary to clearly define what compliant RWA is through this article.

It is generally believed that RWA is a financing project that tokenizes underlying real-world assets through blockchain technology. However, when we scrutinize the underlying assets of each project and trace back the process of project operation, we find that the underlying logic of these projects is actually different. We conducted a systematic study on this issue and summarized the following understanding of the concept of RWA:

We believe that RWA is actually a broad concept and does not have a so-called "standard answer." The process of asset tokenization achieved through blockchain technology can all be referred to as RWA.

(2) Elements and Characteristics of RWA Projects

A true RWA project needs to have the following characteristics:

1. Based on real assets

Whether the underlying assets are real and whether the project team can establish a transparent and third-party audit off-chain asset verification mechanism is the key basis for judging whether the project token will achieve effective value determination in reality. For example, PAXG, the project issues tokens that are pegged to gold in real time, each token is backed by 1 ounce of physical gold, and the gold reserves are on a third-party management platform, and quarterly reserve audits are conducted by third-party audit companies, and even support the redemption of the corresponding amount of physical gold with tokens. This highly transparent and regulated asset verification mechanism allows the project to earn the trust of investors and provide it with a basis for effective valuation in the real financial system.

2. Asset Tokenization on Chain

Asset tokenization refers to the process of converting real-world assets into digital tokens that can be issued, traded, and managed on-chain through smart contracts and blockchain technology. The value transfer and asset management processes of RWA are automated and executed through smart contracts. Unlike traditional financial systems that rely on intermediaries for transactions and settlements, RWA projects can leverage smart contracts to achieve transparent, efficient, and programmable business logic execution on the blockchain, significantly enhancing asset management efficiency and reducing operational risks.

Asset tokenization endows RWA with key characteristics of being divisible, tradable, and highly liquid. After asset tokenization, assets can be split into smaller tokens, lowering the investment threshold, changing the way assets are held and circulated, and enabling retail investors to participate in investment markets that were previously high-threshold.

3. Digital assets have ownership value

The tokens issued by RWA projects should belong to digital assets with property attributes. Project parties should clearly distinguish between data assets and digital assets: data assets are collections of data owned by enterprises that can create value. In contrast, digital assets are the value itself and do not need to be repriced through data. To illustrate, when you design a painting, upload it to the blockchain, and generate an NFT, this NFT is a digital asset because it can be authenticated and traded. However, the large amount of user feedback, browsing data, click-through rates, and other data you collect about this painting belongs to data assets. You can analyze data assets to determine user preferences, improve your work, and adjust its price.

4. The issuance and circulation of RWA tokens comply with legal regulations and are subject to administrative supervision

The issuance and circulation of RWA tokens must be operated within the existing legal framework, otherwise it may not only lead to the failure of the project, but also may lead to legal risks. First of all, real-world assets must be real, legitimate, and have clear ownership without disputes, so that they can serve as the basis for token issuance. Second, RWA tokens usually have income rights or asset interests, which can easily be recognized as securities by regulators in various countries, so they must be handled in compliance with local securities regulations before issuance. The issuer must also be a qualified institution, such as holding an asset management or trust license, and complete KYC and anti-money laundering procedures. After entering circulation, the trading platform of RWA tokens also needs to be regulated, usually requiring a compliant exchange or a secondary market with a financial license, and no random transactions on decentralized platforms are allowed. In addition, information disclosure is required on an ongoing basis to ensure that investors have access to the true picture of the assets linked to the token. Only under such a regulatory framework can RWA tokens be legally and safely issued and circulated.

In addition, the compliance management of RWA has typical cross-jurisdictional characteristics. Therefore, it is necessary to construct a systematic compliance framework covering the legal norms of the asset's location, the flow paths of funds, and various regulatory authorities. Throughout the entire lifecycle of asset on-chain, cross-chain, and the circulation of tokens across borders and platforms, RWA must establish a compliance mechanism that encompasses multiple aspects, including asset confirmation, token issuance, fund flow, profit distribution, user identification, and compliance auditing. This involves not only legal consulting and compliance design but may also require the introduction of third-party trust, custody, auditing, and regulatory technology solutions.

(3) Types and Regulation of RWA Projects

We found that there are two parallel types in the eligible RWA projects:

1. Narrow definition of RWA: Physical assets on the blockchain

We believe that the narrow definition of RWA specifically refers to projects that tokenize real assets with authenticity and verifiability on the blockchain, which is also the general understanding of RWA among the public. Its application market is the most widespread, such as projects that anchor tokens to offline real assets like real estate and gold.

2. STO (Security Token Offering): Financial Assets on Chain

Except for the narrowly defined RWA projects, we found that the majority of existing RWA projects in the market are STO.

(1) Definition of STO

According to the differences in underlying assets, operating logic, and token functions, the existing tokens in the market can generally be divided into two main categories: Utility Tokens and Security Tokens. STO refers to the process of financializing real assets and issuing tokenized shares or certificates in the form of Security Tokens on the blockchain.

(2) Definition of Security Tokens

Securities tokens are in contrast to utility tokens. Simply put, they are on-chain financial products driven by blockchain technology that are subject to securities regulations, similar to electronic stocks.

(3) Regulation of Security Tokens

Under the regulatory framework of mainstream encryption asset-friendly countries such as the United States and Singapore, once a token is identified as a security token, it will be subject to the constraints of traditional financial regulatory agencies (such as the Securities and Exchange Commission), and the design and trading model of the token must comply with local securities regulations.

From an economic perspective, the core objective of financial products is to coordinate the supply and demand relationship between financing parties and investors; from a legal and regulatory standpoint, some countries place more emphasis on protecting investor interests, while others tend to encourage smooth and innovative financing activities. This difference in regulatory stance is reflected in the specific rules, compliance requirements, and enforcement力度 in the legal systems of various countries. Therefore, when designing and issuing RWA products, it is essential to consider not only the authenticity and legality of the underlying assets but also to conduct a comprehensive review and compliance design of key aspects such as product structure, issuance methods, circulation paths, trading platforms, investor access thresholds, and funding costs.

It is particularly noteworthy that if the core appeal of a certain RWA project comes from its high leverage and high return expectations, and positions "hundred-fold, thousand-fold returns" as its main selling point, then regardless of its surface packaging, its essence is very likely to be classified as a securities product by regulatory authorities. Once deemed a security, the project will face a more stringent and complex regulatory system, and its subsequent development path, operating costs, and even legal risks will also increase significantly.

Therefore, when discussing the legal compliance of RWA, we need to deeply understand the connotation of "securities regulations" and the regulatory logic behind it. Different countries and regions have different definitions and regulatory focuses regarding securities. The United States, Singapore, and Hong Kong have all defined the criteria for recognizing security tokens. It is not difficult to see that the method of definition is actually to determine whether the token meets the local securities regulations' criteria for "securities." Once the securities conditions are met, it is classified as a security token. Therefore, we have organized the relevant provisions of key countries (regions) as follows:

A. Mainland China

In the regulatory framework of mainland China, the "Securities Law of the People's Republic of China" defines securities as stocks, corporate bonds, depositary receipts, and other negotiable instruments recognized by the State Council that can be issued and traded, and it also includes the listing and trading of government bonds and shares of securities investment funds under the regulation of the "Securities Law."

(The above image is taken from the Securities Law of the People's Republic of China)

B. Singapore

Although Singapore's "Guidelines on Digital Token Offerings" and "Securities and Futures Act" do not directly mention the concept of "security tokens," they provide detailed circumstances under which tokens may be recognized as "capital market products:"

(The above image is taken from the "Digital Token Issuance Guide" )

C. Hong Kong, China

The Securities and Futures Commission of Hong Kong has specific enumerated regulations regarding the positive and negative lists of securities in the Securities and Futures Ordinance.

! AQc90CA1zzVHHEyQmGnejIPAkRct2BntKf63DwrJ.png! xizyNp5UfLo07RzZQ4W5IeCP2oeKE435yFUGSf0o.png

(The above image is taken from the Securities and Futures Ordinance )

The regulation defines "securities" to include structured products such as "stocks, equity shares, notes, and bonds" without limiting their existence to traditional carriers. The SFC has clearly pointed out in the "Circular on Intermediaries Engaging in Activities Related to Tokenized Securities" that the nature of its regulatory subjects is essentially traditional securities packaged as tokenized.

D. United States

The U.S. Securities and Exchange Commission (SEC) recognises any product that passes the Howey Test as a security. All products that are recognized as securities need to be regulated by the SEC. The Howey test is a legal standard established by the U.S. Supreme Court in 1946 in the case of SEC v. W.J. Howey, Inc. to determine whether a transaction or program constitutes an "investment contract" and is therefore applicable to the regulation of U.S. securities laws.

The Howey Test outlines four conditions under which financial products are classified as "securities." The application of the Howey Test in digital assets is detailed in the SEC's publication, "Framework for 'Investment Contract' Analysis of Digital Assets." We will conduct a detailed analysis of this next:

• The Investment of Money

It refers to investors investing money or assets into a project in exchange for certain rights or expected returns. In the digital asset field, whether using fiat currency or encryption to purchase tokens, as long as there is a value exchange behavior, it is usually recognized as meeting this standard. Therefore, most token issuances generally meet this criterion.

• Common Enterprise

"Joint ventures" refer to a close binding of interests between investors and issuers, usually manifested by the direct correlation of investors' returns with the operational effectiveness of the project. In token projects, if the returns for token holders depend on the business development of the project or the operational results of the platform, it meets the characteristics of a "joint venture," a condition that is also relatively easy to establish in reality.

• Reasonable Expectation of Profits Derived from Efforts of Others

This point is key to determining whether a token will be classified as a security token. This condition means that if an investor purchases a product with the expectation of future appreciation of the product or obtaining other economic returns, and such returns do not arise from their own use or operational activities, but instead rely on the overall development of a project created by the efforts of others, then such a product may be considered a "security."

In the context of RWA projects, if the purpose of an investor purchasing tokens is to obtain future appreciation or economic returns, rather than benefits derived from personal use or operational activities, then the token may have the "expectation of profit," thereby triggering the determination of securities attributes. Especially when the token's returns highly depend on the professional operations of the issuer or project team, such as liquidity design, ecological expansion, community building, or collaboration with other platforms, this characteristic of "relying on the efforts of others" further strengthens its potential for securitization.

RWA tokens that have sustainable value in the true sense should be directly anchored to the real returns generated by the underlying real assets, rather than relying on market speculation, narrative packaging, or platform premiums to drive their value growth. If the value fluctuations of the tokens primarily stem from the "recreation" by the team or platform behind them, rather than the revenue changes of the assets themselves, then they do not possess the characteristics of "narrowly defined RWA" and are more likely to be regarded as security tokens.

The U.S. SEC has introduced the Howey Test in its regulation of encryption tokens, meaning it no longer relies on the form of the tokens to determine regulatory attitude, but instead turns to substantive review: focusing on the actual functions of the tokens, their issuance methods, and investor expectations. This change signifies that U.S. regulatory agencies are becoming stricter and more mature in their legal positioning of crypto assets.

2. What is the legal logic of the "compliance" layering of the RWA project?

Having discussed so much about the concept and definition of RWA, let's return to the core question raised at the beginning of the article, which is also the focus of general attention in the industry:

As RWA has developed to this day, which types of RWA can be considered truly "compliant" RWA? How should we ensure the compliance of RWA projects in practice?

First of all, we believe that compliance means being regulated by local regulatory authorities and adhering to the provisions of the regulatory framework. In our understanding, the compliance of RWA is a layered system.

Layer One: Sandbox Compliance

This specifically refers to the Ensemble sandbox project designed by the Hong Kong Monetary Authority (HKMA), which is currently the most narrow and regulatory pilot definition of "compliance." The Ensemble sandbox encourages financial institutions and technology companies to explore technological and model innovations in tokenization applications through projects like RWA in a controlled environment, in order to support the digital Hong Kong dollar project it leads.

The Hong Kong Monetary Authority (HKMA) has shown a high degree of emphasis on the sovereignty of future monetary systems in promoting the Central Bank Digital Hong Kong Dollar (e-HKD) and exploring the regulation of stablecoins. The competition between central bank digital currencies and stablecoins essentially represents a redefinition and contest for "monetary sovereignty." The sandbox provides a certain degree of policy space and flexibility for project parties, which is conducive to promoting exploratory practices of bringing real assets on-chain.

At the same time, the Monetary Authority is actively guiding the development of tokenized assets, attempting to expand their application in real scenarios such as payments, settlements, and financing within a compliant framework. Several technology and financial institutions, including Ant Group, are members of the sandbox community, participating in the construction of the digital asset ecosystem. Projects entering the regulatory sandbox, to some extent, indicate a higher level of compliance and policy recognition.

However, from the current situation, such projects are still in a closed operation state and have not yet entered the broader secondary market circulation phase, indicating that there are still practical challenges in terms of asset liquidity and market connectivity. Without a stable funding supply mechanism and efficient secondary market support, the entire RWA token system is difficult to form a true economic closed loop.

Second Layer: Hong Kong Administrative Regulatory Compliance

As an international financial center, Hong Kong Special Administrative Region has been continuously promoting institutional exploration in the virtual asset field in recent years. As the first region in China to clearly promote the development of virtual assets, especially tokenized securities, Hong Kong has become a target market that many mainland project parties are eager to try, thanks to its open, compliant, and clearly defined regulatory environment.

By reviewing the relevant circulars and policy practices issued by the Hong Kong Securities and Futures Commission, it is not difficult to find that the core of Hong Kong's regulation of RWA actually involves incorporating it under the framework of STO for compliance management. Additionally, the Securities and Futures Commission has established a relatively complete licensing system for virtual asset service providers (VASP) and virtual asset trading platforms (VATP), and is preparing to release a second virtual asset policy declaration to further clarify the regulatory attitude and basic principles when virtual assets are combined with real assets. Under this institutional framework, tokenization projects involving real assets, especially RWA, have been included in a higher level of compliance regulatory category.

Based on the current RWA projects that have been established in Hong Kong and have a certain market influence, most projects have clear securities attributes. This means that the tokens they issue involve ownership, revenue rights, or other transferable interests in real assets, which can constitute "securities" as defined under the Securities and Futures Ordinance. Therefore, these types of projects must be issued and circulated through Security Token Offerings (STO) in order to obtain regulatory approval and achieve compliant market participation.

In summary, Hong Kong's regulatory positioning on RWA is relatively clear: any mapping of real assets with securities attributes on the blockchain should fall under the STO regulatory framework. Therefore, we believe that the current development path of RWA promoted by Hong Kong is essentially a specific application and practice of the securities tokenization (STO) path.

Third Layer: Clear Regulatory Framework for Encryption-Friendly Regions

In regions with an open attitude towards virtual assets and relatively mature regulatory mechanisms, such as the United States, Singapore, and some European countries, a more systematic compliance path has been established for the issuance, trading, and custody of encryption assets and their mapped real-world assets. If RWA projects in such regions can obtain the corresponding licenses in accordance with the law and comply with information disclosure and asset compliance requirements, they can be regarded as compliant RWAs operating under a clear regulatory framework.

Fourth Layer: "Pan Compliance"

This is the compliance in the broadest sense, which is opposite to "non-compliance". Specifically, it refers to RWA projects within certain offshore jurisdictions where the government temporarily adopts a "laissez-faire" stance towards the virtual asset market, and has not been explicitly deemed non-compliant or illegal. Its business model has a certain degree of compliance space under the local legal framework. Although the scope and concept of this compliance are relatively vague and do not yet constitute complete legal confirmation, it falls under the business status of "actions are permissible unless prohibited by law" before legal regulation becomes clear.

In reality, we can observe that the vast majority of RWA projects find it difficult to achieve the first two types of compliance, and most projects choose to attempt the first three paths—namely, relying on the lenient policies of certain encryption "friendly" jurisdictions to try to bypass sovereign regulatory boundaries and achieve formal "compliance" at a lower cost.

As a result, RWA projects are continually emerging "like dumplings" on the surface, but the timing for generating substantial financial value has not yet arrived. The fundamental turning point will depend on whether Hong Kong can clearly explore the secondary market mechanism for RWA—especially how to open up the channels for cross-border capital flow. If RWA trading remains confined to a closed market aimed at local retail investors in Hong Kong, both asset liquidity and the scale of funds will be extremely limited. To achieve a breakthrough, global investors must be allowed to invest funds into Chinese-related assets through compliance mechanisms, indirectly "buying the dip in China" in the form of RWA.

Hong Kong's role here can be likened to that of Nasdaq for global tech stocks back in the day. Once the regulatory framework matures and the market structure becomes clear, when Chinese people want to "go abroad" for financing and foreigners want to "buy the dip" in Chinese assets, the first stop will definitely be Hong Kong. This will not only be a regional policy dividend but also a new starting point for the reconstruction of financial infrastructure and capital market logic.

In summary, we believe that compliance for RWA projects should be conducted within the current framework, and all projects must maintain policy sensitivity. Any legal adjustments must be addressed urgently. Given the current regulatory environment is not yet fully clarified and the RWA ecosystem is still in the exploratory stage, we strongly recommend that all project parties proactively undertake "self-compliance" work. Although this means investing more resources and bearing higher time and compliance costs at the initial stage of the project, in the long run, it will significantly reduce systemic risks in areas such as legal, operational, and investor relations.

Among all potential risks, the fundraising risk is undoubtedly the most lethal hidden danger to RWA. Once a project design is deemed illegal fundraising, significant legal consequences will arise regardless of whether the assets are real or the technology is advanced, posing a direct threat to the survival of the project itself and delivering a heavy blow to the assets and reputation of the enterprise. During the development of RWA, there will inevitably be differences in compliance definitions across different regions and regulatory environments. For developers and institutions, it is essential to formulate detailed phased compliance strategies that take into account their own business types, asset attributes, and the regulatory policies of their target markets. Only under the premise of ensuring controllable risks can the RWA project be steadily advanced.

3. Legal Advice for RWA Projects****

As a summary, we, as a legal team, systematically outline the core aspects that need to be focused on from a compliance perspective during the promotion of RWA projects throughout the entire chain.

1. Choose a policy-friendly jurisdiction

Under the current global regulatory landscape, the compliance advancement of RWA projects should prioritize jurisdictions with clear policies, mature regulatory systems, and an open attitude towards virtual assets, which can effectively reduce compliance uncertainty.

2. The underlying assets must have real redeemable capability

No matter how complex the technical architecture is, the essence of RWA projects is still to map the rights of real assets onto the blockchain. Therefore, the authenticity of the underlying assets, the reasonableness of the valuation, and the enforceability of the redemption mechanism are all core factors that determine the project's credibility and market acceptance.

3. Obtain investor recognition

The core of RWA lies in asset mapping and rights confirmation. Therefore, whether the final buyer or user of off-chain assets recognizes the rights represented by on-chain tokens is the key to the project's success or failure. This not only involves the personal willingness of investors but is also closely related to the legal attributes of the tokens and the clarity of rights.

While RWA project parties are promoting compliance processes, they must also face another core issue: investors must be informed. In reality, many projects package risks with complex structures, failing to clearly disclose the status of underlying assets or the logic of token models, leading investors to participate without a full understanding. Once fluctuations or risk events occur, it not only triggers a crisis of market trust but may also attract regulatory attention, making matters more difficult to handle.

Therefore, it is crucial to establish a clear mechanism for investor screening and education. RWA projects should not be open to all groups, but should consciously introduce mature investors with a certain level of risk tolerance and financial understanding. In the early stages of the project, it is especially important to set certain thresholds, such as a professional investor certification mechanism, participation limits, risk disclosure briefings, etc., to ensure that entrants are "informed and voluntary," truly understanding the asset logic, compliance boundaries, and market liquidity risks behind the project.

4. Ensure that the institutional operators in the link comply with regulations

In the entire process of RWA, it often involves multiple stages such as fundraising, custody, valuation, tax processing, and cross-border compliance. Each stage corresponds to regulatory agencies and compliance requirements in reality, and project parties need to complete compliance declarations and regulatory connections within the relevant legal framework to reduce legal risks. For example, in the part related to fundraising, special attention should be paid to whether it triggers compliance obligations in aspects such as securities issuance and anti-money laundering.

5. Preventing Post-Compliance Risks

Compliance is not a one-time action; after the RWA project is implemented, it must continuously face changes in the dynamic regulatory environment. How to prevent potential administrative investigations or compliance accountability in the post-factum dimension is an important guarantee for the sustainable development of the project. It is recommended that project parties establish a professional compliance team and maintain a communication mechanism with regulatory agencies.

6. Brand Reputation Management

In the highly sensitive virtual asset industry where information dissemination is crucial, RWA projects must also pay attention to public opinion management and market communication strategies. Building a transparent, credible, and professional project image helps to enhance the trust of the public and regulatory bodies, creating a favorable external environment for long-term development.

4. Conclusion

In the current process of the integration of virtual assets and the real economy, various RWA projects have differing intentions and mechanisms, featuring both technological innovations and financial experiments. The capabilities, expertise, and practical paths of different projects vary widely, warranting our individual study and classification observation.

In the course of extensive research and project participation, we have also deeply realized that for market participants, the biggest challenge often lies not in the technical aspects, but in the uncertainty of the system, especially the unstable factors in administrative and judicial practices. Therefore, what we need more is to explore "practical standards"—even if we do not have legislative and regulatory authority, promoting the formation of industry standardization and compliance in practice is still valuable. As long as there are more participants, mature paths, and regulatory bodies that have established sufficient management experience, the system will gradually improve. Under the framework of the rule of law, facilitating cognitive consensus through practice and promoting institutional evolution through consensus represents a "bottom-up" virtuous institutional evolution for society.

But we must also keep the compliance alarm ringing. Respecting the existing judicial and regulatory framework is the basic premise of all innovative actions. Regardless of how the industry develops and how technology evolves, the law remains the bottom-line logic that protects market order and public interest.

Special statement: This represents the personal views of the author of this article and does not constitute legal advice or opinions on specific matters.