Opportunities, Risks, and Future of RWA Circuit: Insights from Frank, Executive Director of OKX Hong Kong

The “Unlocking RWA: Insights into the Opportunities, Challenges, and Cooperation in the Blockchain Era” roundtable forum, held during the 2024 Hong Kong Web3 Carnival on April 6, concluded successfully. Frank Zhang, Executive Director of OKX Hong Kong, along with Devon Sin, General Manager of ZA Bank, Paolo Chen, Chief Strategy Officer of VDX, Darshan Vaidya, Co-founder of Credora, and other industry experts in the field of Real World Asset On-Chain (RWA), engaged in in-depth discussions on topics such as opportunities in the RWA field, risk management strategies, and the integration of traditional finance and decentralized finance ecosystems.

As one of the Executive Directors of OKX Hong Kong, Frank is responsible for overseeing the business growth and operations of the leading virtual asset platform in Hong Kong. Additionally, he leads the business strategy of the exchange, aiming to provide industry-leading virtual asset services to the Hong Kong market while adhering to strict regulatory compliance standards under the Hong Kong Virtual Asset Service Providers (VASP) regime. In the past, Frank has had over ten years of experience in the traditional finance sector, having worked at renowned financial institutions such as Daiwa Capital, CITIC CLSA Securities, and Liquidnet Asia, where he led the design and implementation of complex algorithmic trading strategies for these companies.

During the event, the guests collectively explored the development opportunities in the RWA field. Frank stated, “The traditional financial ecosystem has a history of over 600 years. Over the past 600 years, people have made the world more efficient through their understanding of the essence of traditional finance and scientific application. However, with the progress of technological innovation, the development of RWA is clearly a trend, and people can further improve efficiency and save related costs through technology. Of course, some traditional financial companies are already very mature and may not necessarily need to establish RWA-related businesses, but other companies may significantly enhance their development space and competitiveness through RWA deployment.”

When discussing how RWA platforms can address risk factors, Frank believes that implementing various strong measures to mitigate risks and enhance investor confidence is crucial for the long-term stable development of the RWA track. Platforms should have a robust security infrastructure, smart contract auditing, self-regulation (such as Proof of Reserves), regulatory compliance, full transparency, appropriate investor communication, continuous monitoring and incident response, and insurance coverage.

“We look forward to more institutions exploring and adopting blockchain-based solutions for various aspects of RWA operations using a hybrid model that combines the advantages of traditional finance, such as regulatory expertise and established customer relationships, with the efficiency and innovation of blockchain platforms. This model can promote the formation of best practices standards in the virtual asset industry, facilitate seamless integration, data sharing, and asset transfer between the traditional finance and virtual asset ecosystems.”

Furthermore, when discussing the future application scenarios and related innovative directions of RWA, Frank mentioned that the following three areas may attract innovators’ interest:

1. Standardization of the protocol for asset on-chain. Standardized protocols will enable seamless integration and interoperability between different RWA platforms, which will facilitate efficient transfer and exchange of cross-platform assets.

2. Strengthening security and privacy measures. With advancements in blockchain technology, improved consensus mechanisms (such as Proof of Stake), privacy protection techniques (such as zero-knowledge proofs), and advanced cryptography will enhance the security and privacy of RWA platforms. This will boost investor confidence, mitigate cybersecurity risks, and address regulatory issues related to data protection, promoting the adoption of RWA in the traditional financial ecosystem.

3. Applying AI and data analytics to RWA platforms. This will enable advanced data processing, risk assessment, and predictive modeling. AI-driven algorithms can analyze large amounts of data, identify patterns, and provide valuable insights for investment decisions, risk management, and asset valuation. This integration will improve operational efficiency, enhance investment strategies, and reshape traditional financial analysis.

Regarding the development of RWA-related innovations in the Hong Kong market, Frank analyzed, “Hong Kong has the potential to play a significant role in the global adoption of RWA platforms and technologies. As one of the world’s top three financial centers, Hong Kong has excellent connectivity, resources, talent, mature financial infrastructure and regulations, a large number of Web3 companies, and creativity. Moreover, Hong Kong has a mature investor base, which provides a favorable and solid environment for the adoption of RWA. Importantly, Hong Kong serves as a gateway to Asia and other regions, and its strategic location and strong international connections may help RWA platforms enter the Asian market on a large scale.”

Frank Zhang
OKX
RWA
Hong Kong