The Integration of TradFi and Web3: Exploring the Path of RWA Asset Tokenization

At a recent Web3 summit, a dialogue themed "When Financial Institutions Harmonize with Web3" attracted widespread attention. The conference invited Mr. Zhou Chenggang, founder and CEO of China Pacific Insurance Investment Management (Hong Kong), to engage in an in-depth discussion on blockchain technology, digital assets, and the future trends of RWA.

Opportunities and Motivations for Traditional Financial Institutions to Enter Web3

Zhou Chenggang stated that Taibao Hong Kong's foray into the RWA and asset tokenization fields is a logical choice. As managers of traditional financial assets, they obtained relevant licenses two years ago and have issued multiple cryptocurrency funds. For Taibao Hong Kong, entering this field is very natural, as they are already managing physical assets such as stocks and bonds.

He emphasized that Taibao Hong Kong hopes to provide products supported by actual returns for the Web3 ecosystem by tokenizing real-world assets and placing them on the chain. This not only fills a market gap but also aims to change some biases in the TradFi sector towards the Web3 world, bringing a more solid value foundation to this emerging industry.

Practical Challenges Faced by Institutional Transformation

During the exploration of Web3, Taibao Hong Kong also encountered quite a few practical issues. Zhou Chenggang pointed out that the current Web3 infrastructure is still not mature enough, especially in areas such as asset custody, banking interfaces, and fund administration services, which are still in the exploratory stage.

He stated that Taibao Hong Kong can currently meet 70%-80% of the standards of traditional funds, which is considered a high level in the industry. They maintain an honest and transparent attitude and believe that with the continuous improvement of infrastructure, there is hope to further increase this ratio in the future, achieving a deep integration of TradFi and Web3.

Asset Tokenization Practice Path

When it comes to the specific practice of asset tokenization, Zhou Chenggang stated that Taibao Hong Kong currently focuses only on the tokenization of financial assets and does not involve physical assets. He explained that the core of tokenization lies in ensuring a strong connection between the Token and the underlying asset, which poses a significant challenge for physical assets.

In contrast, financial assets, especially standardized assets such as fund shares, are easier to ensure the binding relationship between Tokens and underlying assets from a legal framework, and are also more convenient for regulation and custody.

Zhou Chenggang emphasized that asset tokenization must have clear financial logic and practical significance. He believes that the core value of RWA lies in lowering investment thresholds, expanding the investor base, and enhancing trading efficiency and convenience. If tokenization fails to bring significant improvements in these areas, it loses its meaning.

Suggestions for Traditional Financial Institutions

For traditional financial institutions that are still on the sidelines, Zhou Chenggang offered a few suggestions:

1. RWA is a trending and highly certain track worth investing in.

2. It is recommended to establish a dedicated innovation team or Web3 business unit in the organizational structure.

3. In terms of talent reserves, there is a need for composite talents who understand both finance and on-chain mechanisms.

4. It is not necessary to build everything in-house from a technical perspective, but it is important to choose trustworthy, secure, and compliant partner platforms.

He looks forward to more traditional institutions joining together to promote the establishment and maturity of the RWA ecosystem.

Overall, institutions entering Web3 need to find feasible paths within the existing regulatory framework, seeking a balance between innovation and stability. The practices of Taiping Hong Kong demonstrate the possibility of integrating TradFi with Web3, maintaining a compliance-first mentality while showcasing the courage for innovation. In the future, we can expect to see more Chinese institutions emerging in the wave of on-chain finance.