This article is from Tiger Research. The RWA market is growing rapidly, but many jurisdictions still lack supporting regulatory frameworks. Financial institutions in these regions must make strategic choices among three options: wait for domestic legislation, utilize regulatory sandboxes, or directly enter overseas markets.
Cross-border RWA business demands extremely high precision. Before entry, thorough preparation must be completed in six core areas, covering jurisdiction selection, licensing, asset definition, investor scope, and the design of settlement and operational arrangements.
The core objective is to accumulate genuine operational experience by choosing a path that aligns with one's own situation. The two main paths are: directly entering jurisdictions with mature regulations, and adopting the technology path of chain-native platforms.
1. Wait, Experiment, or Go Out
As of the first half of 2026, the market size for Real World Asset (RWA) tokenization has grown to approximately $25 to $36 billion. It has demonstrated clear improvements in efficiency, including automated interest payment and redemption, shorter settlement cycles, and broader client coverage, attracting sustained attention from institutional investors.
However, financial institutions still face practical obstacles in the regulatory vacuum. Although tokenization is not explicitly prohibited, the legal framework needed to confer legal effect on distributed ledger records has not yet been established, leaving investor rights inadequately protected. In response, financial institutions choose among three major directions: waiting for domestic legislation favors risk management but carries the significant risk of missing early market positioning; using regulatory sandboxes allows for limited experimentation but is confined to areas like fractional investment and cannot expand to standardized securities issuance; entering overseas markets first involves issuing digital bonds in jurisdictions where regulation is already in place, building a performance track record locally first, and seizing an early competitive position through experience gained overseas.
The RWA market is inherently a global business, making it crucial to establish operational capabilities across different regulatory environments. Overseas expansion does have practical constraints, but precisely those financial institutions whose domestic regulations remain blank have more reason to accumulate firsthand experience overseas ahead of their peers.
2. Tokenization Is Not Magic
Cross-border RWA business is not the product of a series of isolated decisions. The choices involved are interconnected, with the results of each step determining the viable paths for the next. Tokenization is not magic; it is the process of migrating existing financial instruments to new infrastructure, and this process demands higher, not lower, precision compared to traditional issuance.
Before deciding to enter the market, financial institutions should conduct an honest assessment of their readiness according to the following six requirements.
First, establish an overseas base. Institutions must determine how to utilize key jurisdictions like Hong Kong, Singapore, or the US, and the specific path—via an existing entity, establishing a new entity, or partnering with a local institution. Setting up a new entity offers greater control but requires significant resource investment; partnering enables faster entry but limits the depth of internalization of core capabilities.
Second, licensing. Institutions must meet the licensing requirements of the intended sales location. The choice typically lies between directly obtaining a license (time-consuming and costly) and leveraging an existing platform's license (faster, but requires structuring the issuance according to that platform's specifications).
Third, asset definition. Choosing which assets to tokenize directly determines the entry barrier. Standardized securities like bonds have mature structures and are relatively easy to bring to market; non-standard assets like real estate or trade receivables require significantly more time for legal review and structuring.
Fourth, target investor definition. The typical approach is to cover all jurisdictions except the United States. Selling only to non-US investors can rely on the Regulation S overseas exemption; once US investors are included, it triggers additional requirements like Regulation D, significantly increasing structural complexity. Furthermore, many STO and RWA platforms restrict sales to qualified or institutional investors, so sales strategy must be determined in sync with investor scope.
Fifth, settlement currency and payment process. Institutions must decide whether to accept local currency, US dollars, stablecoins, or wholesale CBDCs for settlement. This is not merely a currency choice; it is a critical variable determining investor accessibility, custody structure, and ultimately revenue. For example, accepting stablecoins introduces exchange needs and potential additional costs.
Sixth, other operational requirements. Depending on the structure, a series of considerations remain, including blockchain choice, custody, on-chain operations, and post-issuance governance. Among these, institutions must especially confirm who controls key functions: interest payment and redemption, registry management, and the ability to force transfer or freeze tokens upon events. These items correspond to the operational requirements of traditional financial instruments.
Tokenization is not magic. The work does not end after the structure is designed; the business only truly materializes once the securities are sold and investors are in place.
3. Where to Operate
Jurisdiction selection is a strategic decision that requires balancing regulatory fit with operational efficiency.
For institutions already having an overseas presence, the most efficient starting point is to first assess existing jurisdictions. If the primary goal of an overseas tokenization strategy is to accumulate firsthand experience as early as possible, putting down roots in a completely new jurisdiction will entail extremely high time and capital thresholds.
Hong Kong: Regulatory Completeness and Enforceability
Hong Kong is the most advanced pioneer market in terms of implementation progress. Security tokens are regulated under the existing Securities and Futures Ordinance framework. A circular issued by the Securities and Futures Commission (SFC) in April 2026 allows licensed virtual asset exchanges to conduct secondary trading, completing the chain from issuance to circulation. Infrastructure like HSBC Orion is already operational, and policy support is relatively strong, including subsidies for issuance costs from the Hong Kong Monetary Authority (HKMA). Institutions should note that if legislation introducing new licenses for virtual asset dealers and custodians proceeds as planned within 2026, attention to compliance with transitional provisions will be necessary.
Singapore: Precise Framework and Regulatory Clarity
Singapore strictly applies the Securities and Futures Act under the principle of "same activity, same risk, same regulation." The Monetary Authority of Singapore (MAS) revised its tokenization guidance in December 2025, providing clearer direction; the Variable Capital Company (VCC) structure simplifies asset segregation operations, particularly suitable for fund structuring. However, even services targeting overseas clients are subject to strict licensing requirements in Singapore, resulting in a high entry barrier.
United States: Regulatory Clarity and Efficient Listing Paths
A joint interpretation issued by the SEC and CFTC in 2026 clarified the asset classification framework. The cost for an issuer to directly apply for a license remains high, but efficient issuance is achievable through vertically integrated platforms like Securitize: utilizing Regulation D exemption for US qualified investors and Regulation S exemption for overseas investors. BlackRock's BUIDL fund is the most representative case of this path.
Each of the aforementioned jurisdictions has mature platforms that can accelerate local entry. These platforms are licensed operators providing a suite of services, including regulatory coordination, fundraising channels within their platform's investor network, and operational infrastructure covering the entire lifecycle from issuance to settlement. When assessing entry into a specific jurisdiction, directly engaging with leading local platforms to test business feasibility is strategically more efficient than first sifting through vast amounts of regulatory documentation.
4. Bypassing Jurisdictions
The previous section discussed the direct path: establishing legal and physical presence and obtaining necessary licenses in a specific jurisdiction. This section discusses a fundamentally different approach: the chain-native path, which designs issuance and circulation around the on-chain environment from the outset.
This path does not invest the time and capital required to establish a physical base. Instead, it partners with on-chain platforms that have built-in compliance capabilities or leverages their structural logic, using such infrastructure to lower the entry barrier. The territorial path from the previous section answers "where to operate," while the chain-native path answers "how to structure the transaction."
Representative cases are as follows. Ondo Global tokenizes US securities through a bankruptcy-remote special purpose vehicle (SPV) established in the British Virgin Islands, leveraging the Regulation S overseas exemption to minimize friction with US securities regulation. Ondo also operates its own secondary market, Ondo Global Markets, directly handling trading of its issued tokens. Plume Nest operates a regulated on-chain vault through KDAB (Kimber Digital Assets Bermuda), a Bermudian subsidiary of Plume, which holds a Class M DABA license issued by the Bermuda Monetary Authority. Access to the Plume Nest platform is restricted to investors who have passed KYB and KYC checks. Additionally, an affiliated company is registered as a transfer agent with the US SEC, providing a second layer of security for ownership registry management and distribution. Thanks to the platform's decentralized design, tokenization outside this regulated structure is also possible, but this path is not suitable for regulated financial institutions.
The chain-native strategy is substantively similar to territorial tokenization but differs significantly in execution. Its primary advantage lies in speed to market and breadth of coverage: institutions are no longer limited to a specific base but can use proven infrastructure to reach the market faster. Another advantage, particularly notable compared to territorial platforms, is that the closed ecosystems of territorial platforms may limit secondary market liquidity, while chain-native platforms designed for scalability can organically connect with DeFi liquidity pools.
However, structural design complexity is a risk that requires serious consideration. The open nature of such platforms allows for a wider range of products but lacks the mature regulatory guidance for core structural decisions like issuance design that exists in the territorial path. Structural differences are categorized by platform rather than jurisdiction, which could create operational burdens for traditional financial institutions. Therefore, assessing whether there are local counterparts for the relevant platform in the target region is necessary preparatory work.
5. No Need to Wait for Regulation, the Market Won't Wait
Large financial institutions in the United States are already in a leading position in the market, either building their own platforms or gaining direct experience on Canton, Solana, and Ethereum. For financial institutions in regions still facing regulatory blanks, launching an overseas RWA business means redesigning the entire value chain locally, covering everything from establishing a base to issuance and distribution, with a preparation period typically lasting six months to over a year.
The following uses a hypothetical case to illustrate the above process: a medium-sized brokerage firm "Company A," with an existing entity in Hong Kong, tokenizing short-term investment-grade bonds for sale to overseas institutional investors.
Step one, assess existing base and licensing status. Company A uses its existing entity (its Hong Kong subsidiary) to avoid the time and cost of setting up a new entity. Whether the existing license covers tokenization business is a separate issue. Local legal counsel assesses the scope of the existing authorization; if necessary, Company A makes a preliminary inquiry with the regulator (here, the Hong Kong SFC) to confirm if changes to license conditions or additional filings are required.
Step two, select platform and infrastructure. To shorten the time required to obtain a license independently, Company A considers conducting business through mature platforms like DigiFT. Vendor due diligence covers the platform's license validity, supported asset scope, custody partners, and investor restrictions. During the contracting stage, legal review covers the issuance structure designed to fit the platform's specifications, liability allocation, and applicable law.
Step three, compliance and product design. This stage finalizes the product structure of the bond to be tokenized, including the underlying asset, investor rights, and applicable law. The standard practice is to utilize the Regulation S exemption, selling to overseas institutional investors outside the US. Legal opinions on compliance with local securities laws must be obtained for each target jurisdiction. Company A must also confirm that its logic for excluding domestic residents is justifiable under securities law before proceeding to the drafting and approval stage of the offering documents.
Step four, design custody structure and on-chain operations. Company A sets up a dual custody arrangement, with a global custodian bank holding the underlying assets and specialized infrastructure holding the on-chain tokens, with related legal opinions obtained through external counsel. Operational details must also be finalized, including the interest payment schedule, settlement currency (USD or stablecoin), and redemption mechanism.
Step five, issuance, execution, and validation. Company A completes the actual issuance and sale according to the finalized structure, and subsequently confirms that operational processes like interest payment and redemption function as designed. Structural design is only the starting point; business completion is contingent upon investors being in place and sales being finalized.
The aforementioned overseas tokenization strategy is not limited to the direct path of "establishing a base in a specific jurisdiction." Paths like chain-native, which can more flexibly bypass jurisdictional boundaries, keep the space of viable solutions open. Legal review will be the most time-consuming and costly threshold under any path. However, waiting for a complete regulatory framework is not the only answer. The ability to quickly outline a viable path and accumulate experience through execution is more critical than any other element, because the substance of a tokenization business lies not in technical design, but in the final achievement of a complete sales process.
No one can predict when regulation will finally land, and the market won't wait. The time to take action is now.
