Source: Ye Kai Wen
The problem with Hong Kong Web3.0: SFC and traditional finance people don’t understand Web3 and are a little afraid or disdainful; Web3 people are not very interested in traditional finance and institutional markets, and think Web3 should be an innovation centered around decentralized retail investors, looking down on conservative institutional investors; but at present, the old channels, PI, and old money are more familiar with traditional finance veterans. If they can work together and strengthen promotion and integration, Hong Kong’s Web3.0 will make further progress.
In terms of virtual asset exchanges, in addition to the issues of licensing and rules, there is also the problem of a dominant licensed exchange that does everything. As a Web2.5 Hong Kong RWA, RWA exchanges cannot act as both referees and players, because the ecological market for corporate financing and financial asset trading requires a specialized market, and this specialization, risk control, and balance require professional institutions and third-party services, not just reliance on a virtual asset exchange.
This means that the talents of Central’s investment banks have a completely new place, the real-world asset tokenization and the ecological market it brings. And this place may be the talents that Europe and America will compete for in the future, because Hong Kong is at the forefront of the world in terms of compliance and infrastructure such as STO/RWA exchanges, and Hong Kong has never lacked traditional European and American financial talent.
Although it is Web2.5, it is impossible to achieve improvement or gradual Web3.0 revolution relying only on traditional financial institutions. The early RWA may look similar to traditional financial products, but its innovation lies in the uplift around blockchain and tokenization, and the next stage of RWA products will show more innovation in native tokens and encrypted financial Lego. Therefore, a group of aspiring individuals are needed to try and innovate in RWA’s encrypted investment banking, conducting relevant asset and racecourse research at the early stage of RWA, tokenized trading, quantitative and market-making of encrypted funds, and become the pillar of RWA development.
RWA
Encrypted investment bank
Compared with traditional securities firms and investment banks, the mature development of RWA, as the tokenization of real-world assets, is marked by the appearance of professional and independent RWA encrypted investment banks. These RWA encrypted investment banks will have strong RWA racecourse (including real-world assets/industries) brand operation management capabilities, through encrypted industrial capital (Crypto RWA Fund) to raise funds for investment banking, raising special funds to invest in RWA, investing and incubating RWA-related racecourse enterprises (RWA assets), issuing RWA products, continuous equity distribution and brand building to achieve RWA premium, continuing and acquiring real-world assets for RWA expansion or issuance of new RWA products, realizing exit and continuous investment rolling. In the fundraising and management of RWA assets, they can also design their own token model (native tokens) based on brand IP or asset governance, equity release, etc.
In traditional financial institutions, there are mainly three types of roles for investment banks: one is securities firms, such as Hong Kong securities firms, which have applied for the No. 1 uplift license and can participate in the issuance and underwriting of RWA products; the second is investment banks such as Goldman Sachs, Morgan, etc., RWA in addition to simple debt, can also be a digital IPO of equity-like stocks, because IPO investment banking business can also be referred to; the third is industrial capital, fully involved in a certain industry, such as Keppel in commercial real estate, Prologis in logistics and warehousing.
The largest and most typical reference value for RWA is traditional industrial investment banks such as Keppel and Prologis. Keppel has strong brand operation and management capabilities in commercial real estate, Prologis in logistics and warehousing, and both have realized fundraising and management through industrial capital investment banking models, in stages: private equity funds + industrial management and operation + IPO + REITs, forming a capital cycle. For example, Keppel has dozens of private equity funds (Funds) corresponding to assets at different stages and has released some shares to insurance funds, pension funds, etc.; it has two listed companies in Singapore: Keppel Group and Keppel Investment; and 6 REITs listed and traded in Singapore. Listed companies and REITs can be increased and merged, as one of the asset exit channels, or assets can be listed separately. Even asset allocation strategy adjustments have very flexible operational methods, such as in 2021 Keppel packaged six Raffles City projects in China and released some shares to Ping An Insurance to realize a cash inflow of over 30 billion, and then made large-scale acquisitions such as first-tier city data centers and other new digital economic assets.
The model of “Chicago Mercantile Exchange + the four major grain merchants” also has special reference value for RWA. For example, in the core bulk agricultural products, such as the soybean industry, international grain merchants use the four major multinational grain merchants represented by “A, B, C, D” to fully utilize the pricing power of the Chicago Mercantile Exchange futures trading and the Wall Street financial derivative and capital markets, taking advantage of the ample financial support of global banks, to control and suppress soybean industry prices, buy low and monopolize the industry before raising prices, promoting the purchase of genetically modified soybeans, and completely controlling China’s soybean industry.
The international grain merchant industrial capital is coordinated with the exchange to control the industry. In the mid-1990s, China basically did not need to import soybeans; in 2001, China opened its soybean market, and foreign capital continued to pour in. At this time, through the Chicago Mercantile Exchange, the four major grain merchants controlled 73% of global grain trade, and they also manipulated the soybean futures prices in the Chicago Mercantile Exchange, which was the international benchmark for soybean trade pricing.
In 2002, 2003, and 2004, the multinational grain merchants and Wall Street speculators forced Chinese soybean crushing enterprises into a corner in the international futures market three times. In 2003, soybean prices soared, and Chinese soybean processing enterprises purchased reserves at high prices; in 2004, soybean prices collapsed after being subjected to the crazy suppression of international investment funds, and almost all Chinese soybean crushing enterprises were destroyed, and the four major grain merchants’ capital entered on a large scale through shareholding, controlling 85% of China’s actual crushing capacity.
After controlling the processing segment, international grain merchant capital began to lock in soybean sources, importing soybeans from their controlled regions; foreign-funded oil enterprises began to buy only genetically modified soybeans, and 90% of genetically modified soybean seeds and pesticides came from Monsanto; international grain merchant capital indirectly controlled the planting segment in the planting areas (Latin America) through contract farming, providing loans, seeds, fertilizers, and agrochemicals.
The four major grain merchants began to control the pricing power of edible oil and had already controlled more than 75% of the raw materials and processing and edible oil supply in China; among 97 large oil and fat companies in China, multinational grain merchants have stakes or controlling shares in 64. With international capital, they have basically completed absolute control of the upstream, middle, and downstream.
Starting in 2011, China’s soybean imports accounted for more than 80%, and the import volume gradually reached one-third of the total global import volume. Thus, the four major grain merchants controlled more than 60% of China’s actual crushing capacity and monopolized more than 80% of China’s soybean sources.
These international grain merchant industrial capitals bought cheap soybeans from South America, enjoyed huge agricultural subsidies in the United States, and sold them at high prices to crushing enterprises in China to profit from the monopolistic trade. “South Americans grow soybeans, Chinese buy soybeans, Americans sell soybeans, and decide the price” is a true portrayal of the soybean industry.
Looking at the name, is it more appropriate to call it an
encrypted investment bank
or a
digital investment bank
?
Overall, the core of RWA’s ecosystem development lies in providing incremental income to asset parties, fund parties, and institutional clients through tokenization, virtual asset exchanges, smart contracts, etc., things that traditional financing cannot or cannot achieve, so as to continue to grow and promote the expansion and maturation of RWA’s ecosystem, and this is exactly the value of the existence of RWA digital investment banking.
Around the 2B market of the corporate financing service ecosystem, it is a huge funnel. The positioning of RWA digital investment banking is very important, it cannot just focus on the part of issuing coins, which is the core concern of the exchange, from the perspective of the entire market funnel of encrypted enterprise financing, early target customer advocacy and education, as well as related conferences, investment and financing courses, etc., to professional investment research reports and racecourse in-depth analysis, then specific asset tokenization scheme discussions with intentioned enterprises, and then roadshows and communications with channels and funding sources interested in RWA assets and products, and then specific tokenization and investment advisory business, and finally, in addition to listing, there is also quantitative and market-making in the secondary market, and so on.
RWA digital investment banking must be a
cross-border model
, both talent and business models need to be cross-border, with experience in traditional finance and encrypted assets, and a thorough understanding of Web3.0, without cross-border, it is difficult to stand in a 2.5 perspective to coordinate and reconcile the synergy between 2.0 and even 1.0 and 3.0.
RWA digital investment banking also needs
channels from traditional securities firms or investment banks
, which are more familiar with the traditional institutional market, so they can quickly start with new product promotion and trial investment in the traditional channels and institutional market, and then continuously promote their uplift to become a pioneer in the RWA asset tokenization racecourse.
The functions of
guidance, incubation, and investment advisory
of RWA digital investment banking are currently lacking and urgently needed, and cannot rely solely on licensed exchanges, licensed securities firms may also be limited by traditional constraints, without truly innovative digital investment banks, RWA will continue to compromise and languish.
Of course, Web3.0 will have many new ways to play, and RWA is no exception, such as the design of
cash flow tokenization
, the design of
liquidity
, and the design of
native tokens
and
encrypted financial Lego
based on RWA assets are all good directions and the core magic weapon of future RWA digital investment banking.
Currently, it is necessary to train or create a influential RWA digital investment bank or a group of them as a flagship.
Just as in traditional stock market investment, people generally value the investment research reports of China Gold, which is made by the investment research center and related research personnel of nearly a thousand people. If RWA products become richer, then the RWA encrypted “stock market” will also need a digital “China Gold”.
