Author: Ye Kai

—— Derlin Holdings is just the beginning; behind the heat of Hong Kong listed company RWA lies a more intense rearrangement of interests

Key Points

RWA's red-clad godfather Kai Ge points out one thing: Many listed companies are doing RWA today, and on the surface, it seems they are talking about asset onboarding, but fundamentally, they are seeking valuation, financing, and new fee rights, while conveniently giving themselves a capital narrative that feels more futuristic.

Main Text

First, let me mention something both amusing and frustrating.

In the past few months, whether from verbal guidance before or the latest regulatory guidelines after, I have received more and more announcements on Hong Kong stocks doing RWA from friends, each attached with the same question: Kai Ge, is this reliable? My first reaction each time is not to answer, but to first ask them: Have you flipped to the last page of that announcement? Many people haven’t. They only looked at the title, the partnering party, and the name of the chain, and then got excited.

This made me think it’s time to clarify this properly.

Kai Ge's Conclusion

The wave of Hong Kong listed companies collectively rushing into the RWA track is not something I believe to be fake. The policy window in Hong Kong is indeed opening seriously, and the actions of licensed institutions are genuinely moving forward; none of this is false. But what is equally true is that what many listed companies currently love is fundamentally not RWA itself, but rather a set of new language behind RWA that is most useful in today’s capital markets. In simple terms, the old stories can no longer garner interest, the old valuations can no longer rise, and the old financing logic seems to be stagnant, so they need a new term, a new packaging, a way to re-insert themselves into the "future narrative." This new term just happens to be "RWA," a coincidence in the market, but an inevitability in capital.

So when looking at listed companies’ RWA announcements, the greatest fear is not misreading, but not having looked seriously at all.

Kai Ge only asks one question: What exactly does this company lack?

Lack of valuation, or lack of financing; lack of clients, or lack of licenses; lack of real assets, or just missing a better-sounding story. Once you figure out this question, then go back to read the announcement, much of the performative aspects will reveal themselves automatically.

Why is Derlin's case only called a sample?

Too many friends asked me about it last week, so I spent some time on this matter. It's not that Derlin is so important, but it just happens to expose some of the most critical aspects in the whole game. The regulatory window is real, licensed intermediaries are real, fund shell layers are real, authorized professional investor distribution is real, and then there’s one more aspect that is also real: the intensity of the media narrative impulse far exceeds the event itself.

The most widely circulated statement in the market is "The Hong Kong Securities and Futures Commission approves Derlin Holdings' first real estate RWA tokenization product." This statement spreads very well and can easily create a fundamentally non-existent picture, as if regulatory departments have fully endorsed it, the product is mature and ready for rollout, and assets can be smoothly traded just like stocks.

However, upon truly flipping out the original announcement, the picture is quite the opposite.

The accurate formulation is that the Hong Kong Securities and Futures Commission has "no further comments" on the related proposed business plan submitted by Derlin Securities and Derlin Digital Family Office (no objection letter); it involves the equity of the limited partnership fund holding Central Derlin Building and the equity of the limited partnership fund investing in Animoca Brands, concerning the tokenization and distribution of these two types of fund shares; it is aimed at eligible professional investors. Analyzing this information piece by piece reveals that, first, this is not "mass approval"; second, this is not a financial product aimed at the general public; third, it is certainly not a simple story of "cutting a building into countless fragments that anyone can buy a piece of."

What’s more interesting is a statement Derlin wrote in an earlier announcement. The company explicitly reminds that holding an RWA token does not equal obtaining the relevant RWA, the tokens may not have a market available for trading, the project is still subject to regulatory approval and licensing requirements, and may not be realized. You see, the most honest words are never in the title, but in the risk warnings on the last page.

This is the first habit I have when looking at RWA announcements. Always check the risk section first, do not look at the partners first.

What many companies need is not RWA, but a new story

I want to clarify the urgent need for Hong Kong listed companies to do RWA, because it holds the core elements of this wave of frenzy that many people are unaware of.

The first level of demand is valuation repair.

Old businesses are stagnant, the market no longer provides a premium, transactions have cooled down, and investors have lost interest in the original main business. What to do at this point? The simplest and most effective method is to find a new concept and translate the original heavy and outdated business into a lighter and more futuristic language. Even if it essentially stays at the stage of research, collaboration, strategic memorandum, or feasibility study, just saying "the company officially enters the RWA track" can temporarily free it from the heavy old industry label, at least for some period, allowing for a bit of breathing room in valuation.

Many actively emerging internet celebrities only see the keywords and titles they want to see. They haven’t looked at Derlin’s 25 years of announcements, haven't considered the fundamentals, and don't know what "passing-through" means. What Derlin currently needs most is market value and to avoid being "passed through." It’s important to know that several real estate listed companies were on the “passed-through” list back in March.

I have a mental list; every time I see those names, my heart sinks. Kaisa just completed its debt restructuring, immediately announcing an RWA strategy, and its stock price rose by 380 percent in a single day. Hanyu Pharma, with consecutive net losses for seven years and its GLP-1 drug still in clinical stages, fragmented and tokenized potential future revenue rights of this drug, and on the announcement day, it was also locked up on the daily limit. Then there’s Huajian Medical, which issued more than ten RWA and digital asset related announcements within three months, with its market value skyrocketing dozens of times, yet not a single RWA implemented, and was called out by regulators. It’s not that there is fraud here; I just feel the picture is too clear, clearly enough to make me uncomfortable; that discomfort doesn't stem from anger, but from a fatigue validated repeatedly, as I have seen too many of these stories.

The second layer of demand is to find a more legitimate new reason for refinancing.

This may sound harsh, but it’s truly real. Many listed companies release RWA announcements, not necessarily to immediately sell a mature product. The greater practical value lies in providing a framework of explanation that feels more in tune with the times for subsequent share placements, fundraising, license upgrades, consultancy expenses, and platform development budgets. Storytelling in capital markets isn’t inherently a crime; the question is whether you are telling a grounded engineering story or just providing a spotlight for financing actions in advance.

Money is the most honest. When looking at announcements, don't just focus on words; look at where the money flows. If a company claims to be deeply engaged in RWA, yet the money primarily flows towards conceptual partnerships, brand promotion, external consultancy, and seminar sponsorships, while the underlying asset valuation, cash flow forecasts, legal structures, distribution systems, custodial arrangements, and market-making mechanisms are vague, then this so-called RWA resembles a public relations project in the capital market, rather than a product project that has entered a mass production logic.

The third layer of demand is the rearrangement of fee structures, which is often overlooked and worth understanding.

Look at Derlin's previous announcements and do the math: a building purchased for 280 million HK dollars in February has a net rental yield of only 2-3% (the real net return for commercial real estate in core areas of Hong Kong is often very low). Real estate private equity funds typically operate for 7-8 years, so please calculate what the financing scale and the return for token investors would be?

What is truly valuable is not asset onboarding, but the entrance to charging

Many people mistakenly believe that the main characters of RWA must be the asset holders. Whoever has a building, a warehouse receipt, or accounts receivable is the central figure in this game. I believe this judgment is wrong and fundamentally so.

In the next five years, the ones who are most likely to reap the greatest dividends are not necessarily those holding assets but those who possess licenses, have clients, have distribution capabilities, have custodial capabilities, have continuous information disclosure capabilities, and can reconcile on and off the chain, along with having access to financial infrastructure. Who designs the structure collects design fees first; who is responsible for distribution takes distribution fees; who handles custody, registration, clearing, compliance interfaces, then continues to earn service fees in the long term.

This logic is not complicated; it is essentially the same as the logic in traditional finance's investment banking, except that the layer of RWA has repackaged everything, making many fundamentally intermediary charging actions sound like a technological revolution.

RWA will not eradicate intermediaries; it will only upgrade them. The lower value-added intermediaries that profited from information opacity and process friction will be directly replaced by code and processes; those strong intermediaries who possess licenses, channels, systems, and customer resources will become stronger than before, as they are no longer mere matchmakers but the entry points for the entire issuance, distribution, reconciliation, and custody chain.

Whoever controls the entry point controls the future fee rights. This is the coldest and most genuine layer of logic behind this wave.

Onboarding is not transparency; transferability is not liquidity

I have always felt that the two biggest misunderstandings in RWA propaganda are transparency and liquidity. These two terms have been abused to an almost numbing extent, and they have been maximally utilized by those superficial influencers watching the commotion.

First, let’s discuss transparency. Many people hear "blockchain" and automatically translate it to "publicly verifiable and traceable." But true transparency is never just about a few transaction records being recorded on the chain; true transparency involves whether you can continuously disclose underlying lease agreements, occupancy rates, valuation methods, net cash flow, expense distribution, disposal priorities after triggering defaults, and who gets paid first and who receives dividends later. Without these elements, even the most visually appealing on-chain interface only reflects a more attractive digital version of a vague structure; it is not about asset transparency, but merely an interface upgrade.

Let alone the key loophole that a lot of promotional materials intentionally avoid: data is on the chain, but the data sources are off the chain. Who provides the data that tells you this building has been rented out and that this accounts receivable is still valid? Is it the issuer's own property company? Is it a related party? Is it a figure buried in a full audit report you can never see? The blockchain's proud immutability locks in the records after being on the chain; the moment before it goes on the chain is the weakest and most manipulable point. If the data entry is dirty, the entire immutable system is merely a digital monument built on quicksand. Don’t forget those cases of data being transferred to the chain via Excel...

Next, consider liquidity; this term is shouted louder and tends to create an expectation that fundamentally does not exist.

"Transferable" does not equal "having a market"; "technically tradable" does not equal "commercially someone is ready to take it up"; and "future plans to establish a secondary market" certainly do not equate to "can exit at any time today." Are you subscribing with your own money that is just transferring from left hand to right hand, or is it genuinely raised from a market-driven first market? If there is no market maker, no continuous quoting mechanism, no stable buying depth, and no clear redemption or exit arrangements, then so-called liquidity is merely a vision written in roadshow materials, not an exit that investors can truly use. Derlin itself has clearly stated in its announcement that the related tokens may not exist in a market available for trading; the company has made this point clear, and the market needs to package this as a "liquidity revolution," which is a bit too enthusiastic.

When I look at RWA projects, I like to ask three questions: Who provides the quotes, who will be the market maker, and who will take over? If no one can answer these three questions, it's best not to shout too loudly about liquidity.

From mortgage slaves to digital slaves: the codified production of class anxiety

Having said that, let me mention something even less pleasant, which I believe is the layer of this entire matter that deserves serious clarification.

RWA, in the current dissemination context, hides a very sophisticated narrative mechanism targeting middle-class anxiety. In the past, the symbol of class rigidity was property; owning property meant binding oneself to the train of urban development. Yet housing prices have risen so high that young people can no longer afford them, leading to anxiety that comprises hopelessness, anger, and longing.

Now, RWA tells you: It’s okay if you can’t afford an entire building; you can buy a token of "one-tenth of a square meter," and you are a landlord too; you are part of that story now. This narrative structure is precisely accurate. For instance, there’s a shopping mall advertising screen cut into 150 sections, priced at 1,250 HK dollars each, and purchasing it allows your girlfriend’s name to scroll on the screen for fifteen seconds. They call this RWA, asset onboarding, and inclusive finance. But when you think about it, the boy isn't buying an advertising spot; he’s purchasing the surprise of his girlfriend taking a photo under the screen and posting it on social media, the sense of existence in his role as a boyfriend, that moment of illusion where he is finally seen in this city. The mall takes in 1,250 HK dollars, and he receives a scream of excitement. This isn't an investment; it's an anthropological sample, a way of purchasing emotional validation through commodity exchange.

The real trouble lies with those who sell this kind of emotional consumption packaged as investment products.

You think you have bought assets, but what you actually purchased is trust in some story; you think you have boarded that train of class, but what you received is a promissory note bearing your name, a note that could be torn up at any moment due to technical issues, regulatory changes, or data fraud.

From mortgage slaves to digital slaves, the forms of human bondage are iterating, yet the anxiety itself has never changed.

The model room has appeared; mass-produced houses are far from finished

I have maintained a complex mentality towards this matter. As an early proponent of RWA and a consistent advocate, I don’t intend to deny the direction of the entire path; the policy window in Hong Kong is indeed opening, institutional explorations are indeed progressing, and licensed entities are indeed forming systems. All of this is real, and denying this is foolish.

But equally real is the genuine gap between regulatory feasibility and commercial viability. Just because something is accepted doesn't mean "this can be tried"; it doesn't mean this matter has been verified to be viable, nor does it mean it can be scaled. From "can issue" to "can sell," from "can sell" to "can sustainably distribute," there are licenses, clients, audits and valuations, market makers, custodians, continuous information disclosure, and alignment of on-chain and off-chain records, as well as tax, legal enforcement, and clearing priority—an entire suite of tough work no one is willing to elaborate on in roadshows. Any misstep in any link and RWA will shift back from "future finance" to "concept finance." Just like the projects we guide, in the end, clients either resort to traditional financing due to high threshold issuance fees, or we actively abandon clients whose assets and cash flows do not meet the conditions for ABS and REITs.

Therefore, Kai Ge's final judgment: today's wave of RWA enthusiasm among Hong Kong listed companies contains real projects, real packaging; there are genuine transformations and genuine leveraging of trends. We cannot treat all announcements as industry revolutions just because some are being seriously pursued; nor can we dismiss the entire road just due to concepts being leveraged by others. Especially with the latest regulatory guidelines from the China Securities Regulatory Commission opening up issuance of domestic assets abroad.

Those that can be fulfilled are called assets. Those that can be reconciled are called finance. Those that can distribute cash sustainably are worthy of discussing RWA.

When viewing announcements, do not look at the posters first; check the fulfillment first; do not look at the stories first; check the reconciliations first; and do not focus on who shouts the loudest, but rather on who can share profits in the long term.

The model rooms have emerged, but the mass-produced houses are still far from completed. Only those who finish the dirty, tiring, and tedious work have the qualification to talk about the next stage.

It’s fine to listen to the commotion, but when it’s time to act, it’s best left to professionals to do professional work.

If you are also looking into RWA projects, the transformation of Hong Kong listed companies, or licensed pathways in Hong Kong, save this article and next time you look at announcements, check the assets, the licenses, the reconciliations, and finally the stories.

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