Tiger Research: Move RWA Tokenization Overseas First

Key Points

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, use regulatory sandboxes, or directly enter overseas markets.

Cross-border RWA operations require a high degree of precision. Before entering, thorough preparations 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 real operational experience by choosing a path that fits one's circumstances. The two main paths are: directly entering jurisdictions where regulation is already mature, and adopting a technological path using on-chain native platforms.

1. Wait, Experiment, or Go Abroad

As of the first half of 2026, the market size for tokenized real-world assets (RWA) has grown to approximately $25 billion to $36 billion. It shows clear improvements in efficiency, including automated interest payments and redemptions, shorter settlement cycles, and broader customer coverage, attracting continuous attention from institutional investors.

However, financial institutions still face real barriers in a regulatory vacuum. While there is no explicit prohibition on tokenization, the legal framework required to give legal effect to distributed ledger records has yet to take shape, resulting in insufficient protection for investor rights. In response, financial institutions must choose among three major directions: waiting for domestic legislation, which is beneficial for risk management but carries significant risks of missing early market positions; using regulatory sandboxes, which allows limited experimentation but is confined to fragmented investments and cannot extend to the issuance of standardized securities; entering overseas markets first, issuing digital bonds in jurisdictions where regulation is already in place, achieving performance records locally, and leveraging experiences accumulated abroad to seize early competitive positions.

The RWA market is essentially a global business, making it crucial to establish operational capabilities in different regulatory environments. While there are practical constraints to overseas expansion, it is precisely those financial institutions whose domestic regulations remain blank that have more reason to rush ahead of their peers to accumulate firsthand experience in overseas markets.

2. Tokenization is Not Magic

Cross-border RWA operations are not the result of a series of isolated decisions. The choices involved are interlinked, with the outcome of one step determining the optional paths of the next. Tokenization is not magic; it is a process of migrating existing financial instruments to new infrastructures, and this process requires a higher degree of precision than traditional issuance, not less.

Before deciding to enter the market, financial institutions should honestly assess their preparedness according to the following six requirements.

First, establish an overseas base. Institutions must determine how to utilize key jurisdictions such as Hong Kong, Singapore, or the United States, and whether to do so through existing entities, newly established entities, or partnerships with local institutions. New entities offer stronger control but require significant resource investment; entering through partnerships is faster but limits the depth of internalizing core capabilities.

Second, licensing. Institutions must meet the licensing requirements of the anticipated sales locations. The choice typically lies between obtaining a license directly (which is time-consuming and costly) and borrowing an existing platform's license (which is faster but requires building the issuance structure according to that platform's specifications).

Third, asset definition. The choice of which assets to tokenize directly determines the entry barriers. Bond-like standardized securities structures are mature and relatively easy to push to market; non-standard assets such as real estate or trade receivables require significantly more time for legal review and structural design.

Fourth, target investor definition. The typical practice is to cover all jurisdictions except the United States. Selling only to non-U.S. investors can rely on Regulation S's overseas exemption; once U.S. investors are included, additional requirements such as Regulation D will be triggered, significantly increasing structural complexity. Moreover, many STO and RWA platforms restrict sales to qualified or institutional investors, so the sales strategy must be synchronized with the investor scope.

Fifth, settlement currency and payment processes. Institutions must decide whether to accept local currency, USD, stablecoins, or wholesale CBDC settlements. This is not just a currency choice but a key variable that determines investor accessibility, custody structure, and ultimately revenue. For example, accepting stablecoins introduces exchange demands and potential additional costs.

Sixth, other operational requirements. Depending on the structure, there are a series of considerations, including blockchain selection, custody, on-chain operations, and post-issuance governance. Institutions must particularly confirm who controls the ability to manage interest payments and redemptions, registration management, and forced transfer or freezing of tokens in the event of incidents. These matters correspond to the operational requirements of traditional financial instruments.

Tokenization is not magic. Once the structural design is complete, the work is not finished until the securities are sold and investors are in place.

3. Where to Operate

Jurisdiction selection is a strategic decision that requires weighing regulatory fit against operational efficiency.

For institutions that already have an overseas presence, the most efficient starting point is to first assess existing jurisdictions. If the primary goal of the overseas tokenization strategy is to accumulate firsthand experience as early as possible, then re-establishing roots in a brand new jurisdiction will mean extremely high time and capital thresholds.

Hong Kong: Regulatory Completeness and Executability

Hong Kong is the leading market with the most advanced implementation progress. Securities tokens are regulated under the existing Securities and Futures Ordinance framework, and in April 2026, the Securities and Futures Commission (SFC) issued a circular allowing licensed virtual asset exchanges to conduct secondary trading, completing the full chain from issuance to circulation. Infrastructure such as HSBC Orion has already been launched, and policy support is also substantial, including subsidies from the Hong Kong Monetary Authority (HKMA) for issuance costs. Institutions need to be aware that if the legislation introducing new licenses for virtual asset traders and custodians proceeds as planned in 2026, compliance with transitional provisions will need attention.

Singapore: Precise Framework and Regulatory Clarity

Singapore strictly applies the principle of "same activities, same risks, same regulation" under the Securities and Futures Act. The Monetary Authority of Singapore (MAS) revised the tokenization guidelines in December 2025, providing clearer guidance; the Variable Capital Company (VCC) structure simplifies asset isolation operations, particularly suitable for fund structure construction. However, even for services aimed at overseas clients, Singapore imposes strict licensing requirements, resulting in a high entry threshold.

United States: Regulatory Clarity and Efficient Listing Pathways

In 2026, the SEC and CFTC issued a joint interpretation clarifying the asset classification framework. The cost of applying for a license directly as an issuer remains high, but through vertically integrated platforms like Securitize, efficient issuance can be achieved: using Regulation D exemptions for U.S. qualified investors and Regulation S exemptions for overseas investors. BlackRock's BUIDL fund is a representative case of this pathway.

Each of the jurisdictions mentioned has mature platforms that can accelerate local entry. These platforms are licensed operators providing a comprehensive suite of services, including regulatory coordination, fundraising channels within the platform's investor network, and operational infrastructure covering the entire lifecycle from issuance to settlement. When evaluating entry into a specific jurisdiction, directly engaging with local leading platforms to test business feasibility is strategically more efficient than first sorting through a large volume of regulatory documents.

4. Bypassing Jurisdictions

The previous section discussed the direct path, which involves establishing legal and entity presence in specific jurisdictions and obtaining necessary licenses. This section discusses a fundamentally different approach: the on-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 an entity base but collaborates with on-chain platforms that have built-in compliance capabilities or borrows their structural logic to lower entry barriers through such infrastructure. The territorial path discussed in the previous section answers the question of "where to operate," while the on-chain native path answers the question of "how to construct the transaction structure."

Representative cases include: Ondo Global tokenizing U.S. securities through a bankruptcy-isolated special purpose vehicle (SPV) established in the British Virgin Islands, minimizing friction with U.S. securities regulation by utilizing Regulation S's overseas exemption. Ondo also operates its own secondary market, Ondo Global Markets, directly handling transactions of the issued tokens. Plume Nest holds a Class M DABA license issued by the Bermuda Monetary Authority through its Bermuda subsidiary KDAB (Kimber Digital Assets Bermuda), operating a regulated on-chain vault. Access to the Plume Nest platform is limited to investors who have passed KYB and KYC audits. Additionally, an affiliated company is registered with the U.S. SEC as a transfer agent, providing a second layer of assurance for ownership registration 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 on-chain native strategy is essentially similar to territorial tokenization but differs significantly in execution. Its primary advantages are entry speed and coverage breadth: institutions are no longer limited to a specific base but can reach the market faster using already validated infrastructure. Another advantage, particularly when compared to territorial platforms, is that the closed ecosystems of territorial platforms may limit secondary market liquidity, while on-chain native platforms designed for scalability can organically connect to DeFi liquidity pools.

However, the complexity of structural design is a risk that requires careful consideration. The open nature of such platforms allows for a wider range of products, but in core structural decisions such as issuance design, they lack the mature regulatory guidance that territorial paths have. The structural differences of these platforms are categorized by platform rather than by jurisdiction, which may impose operational burdens on traditional financial institutions. Therefore, assessing whether there are corresponding local partners for these platforms in the target region is a necessary preparatory step.

5. No Need to Wait for Regulation, the Market Won't Wait

Large financial institutions in the U.S. are already leading the market, either building their own platforms or directly accumulating experience on Canton, Solana, and Ethereum. For financial institutions still in regions with regulatory blanks, launching overseas RWA operations means redesigning the entire value chain locally, covering the entire process from establishing a base to issuance and distribution, with a preparation period typically requiring six months to over a year.

The following is a hypothetical case that restores the above process: a medium-sized brokerage firm "Company A" has an entity in Hong Kong and tokenizes short-term investment-grade bonds for sale to overseas institutional investors.

Step 1: Assess existing base and licensing status. Company A uses its existing entity (i.e., its Hong Kong subsidiary) to avoid the time and costs associated with establishing a new entity. Whether the existing license covers tokenization is another independent issue. Local legal advisors assess the scope of existing authorizations, and if necessary, Company A consults with the regulatory authority (in this case, the Hong Kong SFC) to confirm whether changes to license conditions or additional filings are required.

Step 2: Choose platforms and infrastructure. To shorten the time required for self-applying for a license, Company A considers conducting business through established platforms like DigiFT. Vendor due diligence covers the validity of the platform's license, the range of supported assets, custody partners, and investor restrictions. During the contracting phase, legal reviews cover the issuance structure designed to fit the platform's specifications, liability allocation, and applicable laws.

Step 3: Compliance and product design. This stage finalizes the product structure of the bonds to be tokenized, including underlying assets, investor rights, and applicable laws. The standard practice is to utilize Regulation S exemptions to sell to overseas institutional investors outside the U.S. 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 legitimate under securities law before proceeding to draft and approve issuance documents.

Step 4: Design custody structure and on-chain operations. Company A establishes a dual custody arrangement, with a global custodian holding the underlying assets and a professional infrastructure handling the on-chain tokens, with relevant legal opinions obtained through external lawyers. Operational details must also be finalized, including interest payment plans, settlement currencies (USD or stablecoins), and redemption mechanisms.

Step 5: Issuance, execution, and verification. Company A completes the actual issuance and sales according to the finalized structure and subsequently confirms that operational processes such as interest payments and redemptions can operate as designed. Structural design is only the starting point; the completion of the business must be based on the arrival of investors and the completion of sales.

The overseas tokenization strategy described above is not limited to the direct path of "establishing a base in a specific jurisdiction." On-chain native paths and others that can more flexibly bypass jurisdictional boundaries keep the space for feasible solutions open. Legal reviews will be the most time-consuming and costly hurdle under any path. However, waiting for a complete regulatory framework is not the only answer. The ability to quickly outline feasible paths and accumulate experience through execution is more critical than any other factor, as the essence of a tokenization business lies not in technical design but in the ultimate achievement of a complete sales process.

When regulation will ultimately land is unpredictable, and the market will not wait. The time to take action is now.

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