Tiger Research: Move RWA Tokenization Overseas First

Core Takeaways

This article is from Tiger Research. The RWA market is growing rapidly, but many jurisdictions still lack the necessary regulatory frameworks. Financial institutions in these regions face a strategic choice between three options: wait for domestic legislation, utilize regulatory sandboxes, or enter overseas markets directly.

Cross-border RWA operations demand high precision. Before entering, institutions must be fully prepared across 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 the path that best suits one's circumstances. The two main paths are: directly entering jurisdictions with mature regulatory frameworks, and adopting the technical path of on-chain native platforms.

1. Wait, Experiment, or Go Abroad

As of the first half of 2026, the tokenized Real World Asset (RWA) market has grown to approximately $25-36 billion. Its clear efficiency improvements, including automated interest payments and redemptions, shorter settlement cycles, and broader customer reach, continue to attract institutional investor interest.

Yet financial institutions face real hurdles in a regulatory vacuum. While tokenization is not explicitly banned, the legal frameworks needed to grant legal validity to distributed ledger records are still unformed, leaving investor rights without adequate protection. In response, financial institutions choose among three broad directions: Waiting for domestic legislation favors risk management but carries significant risk of missing early market positions; Using regulatory sandboxes allows limited experimentation but only within narrow areas like fragmented investments, not extending to the issuance of standardized securities; Entering overseas markets first involves issuing digital bonds in jurisdictions where regulations are already in place, building a track record locally, and securing an early competitive position through experience gained abroad.

The RWA market is inherently a global business, making the ability to operate across different regulatory environments crucial. While overseas expansion has real constraints, it is precisely those financial institutions whose home regulations are still nascent that have the most reason to gain firsthand experience overseas ahead of their peers.

2. Tokenization is Not Magic

Cross-border RWA business is not a product of isolated decisions. The choices involved are interconnected, where the outcome of one step determines the viable options for the next. Tokenization is not magic; it is the process of migrating existing financial instruments to a new type of infrastructure, requiring greater precision than traditional issuance, not less.

Before deciding to enter, financial institutions should honestly assess their readiness against the following six requirements.

First, Establish an Overseas Base. Institutions must determine how to utilize key jurisdictions like Hong Kong, Singapore, or the U.S., and whether the specific path is through an existing entity, a newly established entity, or collaboration with a local partner. Establishing a new entity offers greater control but requires significant resources; collaboration allows faster entry but limits the depth to which institutions can internalize core capabilities.

Second, Licensing. Institutions must meet the licensing requirements of the target sales jurisdiction. The choice typically lies between directly obtaining a license (time-consuming and costly) and leveraging the license of an existing platform (faster, but requiring the issuance structure to be built according to that platform's specifications).

Third, Asset Definition. The choice of asset to tokenize directly determines the ease of entry. 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 structural design.

Fourth, Defining Target Investors. The typical approach is to cover all jurisdictions except the U.S. Selling only to non-U.S. investors can rely on Regulation S offshore exemptions; including U.S. investors triggers additional requirements like Regulation D, significantly increasing structural complexity. Additionally, many STO and RWA platforms restrict sales to accredited or institutional investors, so the sales strategy must be determined alongside the investor scope.

Fifth, Settlement Currency and Payment Process. Institutions must decide whether to accept settlement in fiat currency, USD, stablecoins, or wholesale CBDCs. This is not merely a currency choice but a key variable determining investor accessibility, custody structure, and ultimately revenue. For instance, accepting stablecoins introduces conversion needs and potential additional costs.

Sixth, Other Operational Requirements. Depending on the structure, there are further considerations including blockchain choice, custody, on-chain operations, and post-issuance governance. Institutions must specifically confirm who controls interest payments and redemptions, register management, and the ability to force transfer or freeze tokens upon specific events. These items correspond to the operational requirements of traditional financial instruments.

Tokenization is not magic. The work is not done once the structure is designed; the business is only truly realized when the securities are sold and investors are in place.

3. Where to Operate

Jurisdiction selection is a strategic decision that requires balancing regulatory fit and operational efficiency.

For institutions with existing overseas presence, the most efficient starting point is to evaluate their current jurisdictions. If the primary goal of an overseas tokenization strategy is to accumulate firsthand experience early, establishing a new base in an unfamiliar jurisdiction represents a prohibitively high time and capital threshold.

Hong Kong: Regulatory Completeness and Enforceability

Hong Kong is the most advanced first-mover market. Security tokens are regulated under the existing Securities and Futures Ordinance. A circular from 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 live, and policy support is substantial, including subsidies from the Hong Kong Monetary Authority (HKMA) for issuance costs. Institutions should note that if legislation introducing new licenses for virtual asset dealers and custodians proceeds as planned in 2026, compliance with transitional provisions needs attention.

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 facilitates asset segregation and is particularly suitable for fund structures. However, Singapore imposes strict licensing requirements even for services targeting overseas clients, resulting in a high entry barrier.

United States: Regulatory Clarity and Efficient Listing Paths

A joint interpretation by the SEC and CFTC in 2026 clarified the asset classification framework. The cost of applying for a license directly as an issuer remains high, but efficient issuance is possible through vertically integrated platforms like Securitize: using Regulation D exemptions for U.S. accredited investors and Regulation S exemptions for overseas investors. BlackRock's BUIDL fund is the most representative case of this path.

Each of these jurisdictions has mature platforms that can accelerate local entry. These platforms are licensed operators offering a suite of services, including regulatory coordination, access to investor networks within the platform for fundraising, and operational infrastructure covering the entire lifecycle from issuance to settlement. When evaluating entry into a specific jurisdiction, directly engaging with leading local platforms to test business feasibility is strategically more efficient than first reviewing large amounts of regulatory documentation.

4. Bypassing Jurisdictions

The previous section discussed the direct path: establishing legal and physical presence and obtaining necessary licenses within a specific jurisdiction. This section discusses a fundamentally different approach: the on-chain native path, which designs issuance and distribution around the on-chain environment from the outset.

Instead of investing the time and capital required to establish a physical base, this path lowers the entry barrier by partnering with on-chain platforms that have built-in compliance capabilities, or by leveraging their structural logic through such infrastructure. While the jurisdictional path in the previous section answered "where to operate," the on-chain native path answers "how to structure the transaction."

Representative cases follow. Ondo Global tokenizes U.S. securities through a bankruptcy-remote Special Purpose Vehicle (SPV) established in the British Virgin Islands, minimizing friction with U.S. securities regulations by utilizing Regulation S offshore exemptions. Ondo also operates its own secondary market, Ondo Global Markets, directly handling trading of the issued tokens. Plume Nest, through Plume's Bermuda subsidiary KDAB (Kimber Digital Assets Bermuda), holds a Class M DABA license from the Bermuda Monetary Authority, operating a regulated on-chain vault. Access to the Plume Nest platform is limited to investors who have passed KYB and KYC checks. Additionally, an affiliated company is registered with the U.S. SEC as a transfer agent, providing a second layer of assurance for ownership record management and distribution. Due 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 substantively similar to jurisdictional tokenization but differs significantly in execution. Its primary advantages are speed of entry and breadth of coverage: institutions are no longer limited to a specific base but can reach the market faster using proven infrastructure. Another advantage stands out in comparison to jurisdictional platforms: the closed ecosystems of jurisdictional platforms may limit secondary market liquidity, whereas on-chain native platforms designed for scalability can organically connect to DeFi liquidity pools.

However, structural complexity is a risk requiring careful consideration. The open nature of such platforms allows for a broader range of products, but they lack the mature regulatory guidance available for jurisdictional paths on core structural decisions like issuance design. The structural differences of these platforms are defined by the platform itself, not by jurisdictions, which can create operational burdens for traditional financial institutions. Therefore, evaluating whether local counterparts for these platforms exist in the target region is a necessary preparatory step.

5. Don't Wait for Regulation; the Market Won't Wait

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

The following hypothetical case illustrates this process: a mid-sized securities firm, "Company A," which already has a presence in Hong Kong, tokenizes short-term investment-grade bonds and sells them to overseas institutional investors.

Step 1: Assess Existing Base and License Status. Company A uses its existing entity (its Hong Kong subsidiary) to avoid the time and cost of setting up a new one. Whether the existing license covers tokenization activities is a separate issue. Local legal counsel assesses the scope of the existing authorization. If necessary, Company A makes a preliminary inquiry to the regulator (here, the Hong Kong SFC) to confirm whether license condition changes or additional filings are required.

Step 2: Select Platform and Infrastructure. To shorten the time required for self-licensing, Company A considers conducting business through established platforms like DigiFT. Supplier due diligence covers the platform's license validity, supported asset types, custody partners, and investor restrictions. During the contract phase, legal review covers the issuance structure tailored to the platform's specifications, liability allocation, and governing law.

Step 3: Compliance and Product Design. This phase finalizes the product structure of the tokenized bond, including the underlying asset, investor rights, and governing law. The standard practice is to use the Regulation S exemption to sell to overseas institutional investors outside the U.S. Legal opinions on local securities law compliance are required for each target jurisdiction. Company A must also confirm the legal justification under securities law for excluding its domestic investors before proceeding to the drafting and approval of issuance documents.

Step 4: Design Custody Structure and On-Chain Operations. Company A establishes a dual custody arrangement, with a global custodian bank holding the underlying assets and specialized infrastructure hosting the on-chain tokens, with relevant legal opinions obtained from external counsel. Operational details are also finalized, including the interest payment schedule, settlement currency (USD or stablecoins), and redemption mechanism.

Step 5: Issuance, Execution, and Verification. Company A completes the actual issuance and sale according to the finalized structure. It then confirms that operational processes like interest payments and redemptions function as designed. Structure design is just the starting point; the business is complete only when investors are in place and sales are finished.

This overseas tokenization strategy is not limited to the direct path of "establishing a base in a specific jurisdiction." Paths like the on-chain native approach, which offer more flexibility to bypass jurisdictional boundaries, mean the space of feasible solutions is effectively open-ended. Legal review will be the most time-consuming and costly hurdle on 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 factor. The reason is this: the essence of a tokenization business lies not in its technical design, but in the ultimate completion of the full sales process.

No one can predict when regulations will finally be enacted, and the market will not wait. The time to act is now.