Pathways, key points, and strategic choices for precious metals RWA landing in Hong Kong

Written by: Xiao Za Legal Team

RWA is undoubtedly the hottest term in the field of virtual currency recently. The Sa Jie team has also published several articles introducing it. Currently, there are two compliant RWA projects in Hong Kong, namely the photovoltaic project of Xiexin Technology and the battery swap station project of Longxin Group. The underlying assets mainly focus on renewable energy and environmental protection types. The Hong Kong government published the "Hong Kong Digital Asset Development Policy Declaration 2.0" on June 26, 2025, reiterating the special administrative region government's commitment to making Hong Kong a global innovation center in the digital asset field, and will further expand the variety of tokenized products. It is clear that the Hong Kong government will regularize the issuance of tokenized government bonds and provide incentives for the tokenization of real-world assets (including clarifying the stamp duty arrangements applicable to tokenized exchange-traded funds, etc.), to enhance liquidity and popularity. The Hong Kong government will also promote the tokenization of a wider range of assets and financial instruments, demonstrating the diverse applications of this technology in various sectors, including precious metals (such as gold), non-ferrous metals, and renewable energy (such as solar panels). This provides an opportunity for precious metal companies to raise funds through RWA.

Considering that RWA is still in the pilot stage and relies on a sandbox model for issuance, and given the Hong Kong government's clear statement to expand the types of tokenized physical assets, it is inevitable that more types of underlying assets will be explored. Therefore, the Sister Sa team predicts that the next RWA landing project is likely to return to traditional industries. At the same time, because the "Hong Kong Digital Asset Development Policy Declaration 2.0" clearly cites the promotion of diversified applications such as "precious metals (like gold), non-ferrous metals, and renewable energy (like solar panels)," there is currently no complete issuance process and underlying asset standards issued by the authorities. The actual issuance capability depends on communication with SFC (Securities and Futures Commission of Hong Kong) officials. Therefore, if there are quality underlying assets related to precious metals, there is a great possibility of gaining favor from regulatory agencies during the RWA issuance process and obtaining issuance recognition. Today, the Sister Sa team will take gold as an example to provide an in-depth analysis of the path, methods, and strategies for the landing of precious metal RWA in Hong Kong.

01 Possible Issuance Path for Precious Metal RWA

Currently, the two compliant RWA projects on the market convert income rights into digital certificates, allowing investors to map the income rights of off-chain assets through RWA tokens. There are mainly two trading models for gold: one is the spot trading model, and the other is the futures trading model. The futures trading model is also a type of investment in potential future income, which is similar to the two current RWA projects.

On one hand, the "Hong Kong Digital Asset Development Policy Declaration 2.0" mentions that Hong Kong has been included in the LME global warehouse network as a licensed delivery location, enhancing Hong Kong's position in global commodity trading, which means more physical gold may be stored and traded in Hong Kong. On the other hand, the Hong Kong government has also emphasized that it will regularize the issuance of tokenized government bonds. Therefore, the Sa Jie team boldly predicts that future gold RWA will also feature two models of "yield + physical", aligning with the global gold trading market.

(1) Future Income Rights Model

This model focuses on unmined gold (gold mines), splitting and circulating future rights to earnings through digital equity certificates (such as blockchain tokens). Essentially, it is an advance realization and distribution of "expected gold value."

This model can lower the investment threshold by splitting the rights to the earnings of high-value gold mine projects into small shares, allowing ordinary investors to participate in the mining investment field that was previously accessible only to institutions. In terms of the specific operational process, it is similar to existing RWA projects for new energy charging piles, but there are differences compared to the current two RWA projects for charging pile earnings rights. Gold mines, as the underlying asset, can only be roughly estimated in quantity rather than precisely valued, which means that if the actual reserves of the gold mine or the price of gold exceed expectations, investors can obtain excess returns. However, this characteristic also highlights the biggest challenge of this model: how to choose a reliable third-party evaluation agency to assess the gold mine reserves, extraction costs, expected gold production, and market value, and ensure that this work is recognized by investors.

It can be said that the future收益权模式 focuses on the expectation of the rise and fall in the value of gold, with a heavier investment attribute.

(2) Spot Gold Trading Model

This model uses physical gold (such as gold bars and gold nuggets) as the underlying asset, enabling the digital holding, trading, and settlement of spot transactions through RWA tokens. Essentially, it is a "digital certificate of physical gold."

This model establishes a profit right or related rights for physical gold, distinguishing it from existing RWA projects in Hong Kong. In terms of future profits, it relies on the fluctuations of gold prices rather than the operation of the underlying assets, bringing gold trading back under the market framework.

Compared to physical gold trading, RWA tokens can be traded on the secondary market 24/7, with no physical transportation or storage costs, leading to higher trading efficiency. They also address the inconvenience of traditional physical gold storage and the difficulty of division (for example, it's hard to trade 1 gram of gold). Investors can easily hold small amounts of gold. Therefore, this model has stronger liquidity, focuses on attracting more investor participation, and promotes a prosperous secondary market, which may be more suitable for precious metal exchanges, financial institutions, etc. It can be said that the trading attributes are more pronounced.

02 The key points of the precious metal RWA process compared to traditional models

Precious metal RWA is essentially still a type of RWA, so the existing framework of RWA can still be applied to the basic processes. However, precious metal RWA also has its unique characteristics, which inevitably means that some operations need to be adjusted. This section will take the basic process of the Xiexin project RWA as an example to highlight the precautions in the operational process of gold RWA compared to existing Hong Kong RWA projects.

(1) Key Points of the Basic RWA Process - Taking the Xiexin Project as an Example

Taking the Xiexin project as an example, its RWA basic process mainly includes four steps: asset confirmation and data on-chain, token issuance and smart contract design, on-chain subscription and fund custody, and operational dividends and compliance taxation.

First, comprehensively sort out information such as power station property rights, power purchase agreements, and operation and maintenance records. Collaborate with legal advisors to complete compliance due diligence to ensure the project is legal and compliant. Deploy IoT devices at the power station to collect power generation data in real time, encrypt it after edge computing, and upload it to the blockchain, forming a reliable data foundation.

Secondly, the token split is based on the expected future revenue of the power station. For example, if Xiexin Nengke expects the power station to generate a revenue of 200 million yuan in the next 10 years, it will be equally divided into 200 million tokens. The tokens will be bound to the revenue distribution rules and written into a smart contract. When the power generation is below expectations, the contract will automatically trigger a warning and suspend dividends, forming a "risk control closed loop." Meanwhile, the contract code will be audited by professional institutions to ensure system security.

Then, communicate with the SFC to issue the corresponding legal opinions and audit documents, and provide relevant supporting documents as required by the SFC. Issue tokens to qualified investors worldwide through private placement on a licensed virtual asset trading platform in Hong Kong, supporting payments in stablecoins such as USDT.

Finally, daily operational data is automatically captured on-chain, and monthly profit distribution is completed automatically by smart contracts.

(2) Key Points of the Precious Metals RWA Process

If it is a gold RWA leaning towards income rights, it is essentially similar to the Xiexin project. However, due to the opacity of gold mines, more proof documents may be required to verify the authenticity of the underlying assets. In addition to traditional law firms and auditing institutions, specialized mining and assessment agencies need to be introduced, while other processes can basically serve as a reference.

However, in the trading of physical gold tokenization, unlike the Xiexin project which relies on the expected returns of specific assets (power stations), real-time data, and compliance binding, gold, as a standardized, easily divisible, and globally circulated precious metal, has a tokenization process that focuses more on asset custody, standardized verification, and global liquidity. Therefore, based on the basic process of RWA, gold RWA may need to pay more attention to the following steps:

1. Asset Confirmation

Physical gold RWA investors hold rights to income or related rights, so it is particularly important to focus on the confirmation of the underlying assets at the time of issuance to ensure there are no legal risks or ownership disputes. Each gram of gold can be assigned a unique digital fingerprint through technologies such as laser engraving codes and blockchain hash values, achieving full-chain traceability from mining, smelting to storage. At the same time, purity and weight are tested by third-party institutions and recorded on the chain to ensure "one item, one code" with clear ownership.

2. Institutional Custody

Investors hold the rights to the underlying gold assets or related rights through RWA tokens, which means it is necessary to isolate the assets from the issuer. Otherwise, they would simultaneously hold both the gold as the underlying asset and the funds raised, which poses a higher risk. Therefore, it is essential to introduce a third-party custodial institution to manage the off-chain gold assets, especially paying attention to selecting an LBMA-certified international vault. Additionally, the custodial institution must undergo regular third-party audits to verify that the physical gold corresponds 1:1 with the tokens, preventing "one gold, multiple certificates."

3. Cross-border compliance

There are two Hong Kong RWA projects, with the underlying assets selected as new energy infrastructure, so there is only the flow of funds involved, but the underlying assets are limited by the policies of the project location. However, in the case of physical gold RWA, the situation is completely different. Gold has a global circulation attribute, which means that if trading is conducted globally, it must not only comply with FATF anti-money laundering rules and adapt to various countries' KYC/AML processes but also coordinate with cross-regional regulatory requirements such as the EU's MiCA regulation (Regulation on Markets in Crypto-Assets) and the US MSB. Particular attention must be paid in the design of smart contracts, especially if it involves the redemption and delivery of physical gold, as the settlement process must avoid violating regulatory norms in different regions.

03 Increase Winning Chances: Strategy Selection for Precious Metals RWA

(1) Compliance is the core prerequisite for the successful implementation of a project.

Issuing gold RWA in Hong Kong still carries the biggest risk of insufficient compliance. The Securities and Futures Commission (SFC) of Hong Kong has issued multiple circulars regarding tokenized assets in 2023 and 2024, emphasizing that the issuance of RWA must be integrated into the existing securities regulatory framework.

(2) The structural design should focus on enhancing liquidity and investment attractiveness.

In physical gold RWA, the underlying assets must be deliverable gold bars that meet the standards of the London Bullion Market Association (LBMA), to avoid the circulation restrictions caused by non-standard gold and to facilitate ownership rights. The storage location is recommended to be internationally recognized vaults (such as the Hong Kong Gold and Silver Exchange, HSBC Vault) to enhance investor confidence.

Traditional gold investment has a high threshold. RWA can split 1 kilogram of gold bars into smaller digital shares (such as 1 gram), attracting retail investors. Therefore, fractionalization design helps to increase trading volume and market activity. However, it is important to note that companies also need to consider transaction fees and operating costs. For income-generating gold RWA, it is necessary to clarify the dividend cycle and calculation method, and the fee structure (custody fee, management fee, transaction fee) should be transparent to enhance product predictability, increase investor trust, and avoid investor attrition. In addition, investor profiling should be precise—high-net-worth individuals often seek safe-haven assets and diversification, institutional investors typically focus on liquidity, custody security, and compliance, while retail investors value low thresholds and ease of transaction. When engaging in RWA, gold companies should anchor their target investor group and establish smart contracts based on the investment preferences of different investors.

(3) Strengthen risk awareness and prevent operational and credit risks

Wang Weihong, Vice President of Langxin Technology Group, and Yan Ying, Chief Scientist of Ant Group, stated in their interpretation of Langxin's renewable energy asset RWA that the biggest challenge and difficulty lie in how to achieve the credibility, integrity, verifiability, and usability of data. The risk of untrue data is something that any virtual asset must face. Especially in comparison to gold, the underlying asset itself has significant value, so the related data disclosure may not only target earnings but also the underlying asset itself. During the issuance and actual operation process, it is recommended to use third-party independent custody to avoid the issuer misappropriating the underlying gold, and to have the custody situation regularly audited by accounting firms, issuing corresponding assessments and audit reports. In the design of smart contracts, security audits must be conducted to prevent vulnerabilities that could lead to asset loss, and a multi-signature mechanism can be used for key private keys to reduce the risk of single points of failure.

In addition, it is recommended to ensure that there are sufficient market makers or liquidity providers (LPs) before the issuance. Currently, RWA is primarily aimed at professional investors, and there is no disclosure of investor information. If the issuance of RWA is merely an attempt at tokenization or to gain corresponding fame, it is advisable to have sufficient subscribers when issuing the first gold RWA for safety. This is because the physical gold RWA itself is a tokenized representation of income rights or related rights, and attention should also be paid to designing a reasonable buyback and redemption mechanism to provide exit channels for investors.

In terms of applicable law, it is recommended to clearly specify the governing law and dispute resolution method (optional Hong Kong law + Hong Kong arbitration) in the issuance documents. It is necessary to suggest the issuance of relevant legal opinions for gold ownership, custody contracts, and token issuance agreements to minimize potential legal risks. Additionally, efforts can be made to collaborate with internationally renowned custodial and auditing institutions, and further file with authoritative institutions such as gold exchanges and industry associations to enhance credibility.

04 Written at the End

If gold enterprises or related institutions indeed have the determination for RWA, it is suggested to clarify the underlying assets and complete the issuance of legal opinions and compliance reviews while communicating with the SFC. Obtaining a legal opinion recognized by the SFC before issuance can significantly reduce approval time and further shorten the project cycle. While putting gold inventory information on-chain, it is also necessary to retain offline audits to enhance transparency. Consider simultaneous issuance in multiple markets, communicating and listing in markets such as Singapore and the UAE while issuing in Hong Kong, to expand the investor base. If capable, it is also advisable to continue promoting investor education through roadshows, white papers, and presentations to reduce investors' unfamiliarity with RWA. In addition, companies are advised to formulate long-term operational plans, focusing not only on initial issuance financing but also on planning for secondary market liquidity and subsequent product expansion (such as gold ETFs and pledged loans). In the secondary market, it may be worth trying to collaborate with market makers, introducing liquidity providers to maintain price stability and reduce volatility, thus stabilizing investor confidence and attracting more investors to participate, ensuring the stability and durability of the project.

The Sajia team believes that precious metals, especially gold, will definitely become a popular asset in RWA in the future. Enterprises need to have confidence, but they also need to solidify their process work, conduct continuous compliance and authenticity checks on projects, and be responsible to investors while avoiding crossing regulatory red lines. Only in this way can they operate sustainably, for a long time, and do well.