Tiger Research: Moving RWA Tokenization Overseas First

Core Takeaways

This article is from Tiger Research. The RWA market is growing rapidly, but many jurisdictions still lack a supporting regulatory framework. Financial institutions in these regions face a strategic choice between three options: wait for domestic legislation, use a regulatory sandbox, 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 a path that suits one's own circumstances. The two main paths are: directly entering a jurisdiction with established regulations, and adopting the technical path of on-chain native platforms.

1. Wait, Experiment, or Go Abroad

As of the first half of 2026, the market size for Real World Asset (RWA) tokenization 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 investors.

However, financial institutions still face real obstacles in a regulatory vacuum. While tokenization is not explicitly prohibited, the legal framework required to give legal effect to distributed ledger records has yet to be established, leaving investor rights without adequate protection. In response, financial institutions choose between three broad directions: waiting for domestic legislation is good for risk management but carries a significant risk of missing early market positions; using a regulatory sandbox allows for limited experimentation but is restricted to areas like fragmented investments, not scalable to the issuance of standardized securities; entering overseas markets first means issuing digital bonds in jurisdictions where regulation is already in place, building a track record locally and securing an early competitive position through accumulated overseas experience.

The RWA market is inherently a global business, making it crucial to build operational capabilities across different regulatory environments. Overseas expansion does have practical constraints, but it is precisely those financial institutions whose home regulations are still blank that have more reason to go overseas and accumulate first-hand experience before their peers.

2. Tokenization is Not Magic

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

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

First, establishing an overseas base. Institutions must determine how to utilize key jurisdictions such as Hong Kong, Singapore, or the United States, and the specific path: through an existing entity, a newly established entity, or collaboration with a local partner. New entities offer more control but require significant resources; collaboration offers faster market entry but limits the depth of internalization of core capabilities.

Second, licensing. Institutions must meet the licensing requirements of the jurisdictions where the securities are intended to be sold. The choice usually lies between directly obtaining a license (time-consuming and costly) and leveraging the license of an existing platform (faster, but requires building the issuance structure according to that platform's specifications).

Third, asset definition. The choice of which asset to tokenize directly determines the barrier to entry. Standardized securities like bonds have mature structures and are relatively easier 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. A typical approach is to cover all jurisdictions except the United States. Selling only to non-U.S. investors can rely on the offshore exemption under Regulation S; including U.S. investors triggers additional requirements like Regulation D, significantly increasing structural complexity. Furthermore, many STO and RWA platforms restrict sales to accredited or institutional investors, so the sales strategy must be determined in tandem with the investor scope.

Fifth, settlement currency and payment processes. Institutions must decide whether to accept settlement in local currency, USD, stablecoins, or wholesale CBDCs. This is not just a currency choice; it is a key 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, there are other considerations, including blockchain selection, custody, on-chain operations, and post-issuance governance. Institutions must particularly confirm who controls interest payments and redemptions, registry management, and the ability to force transfer or freeze tokens in the event of an occurrence. These matters 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 is only truly realized after 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 with an existing overseas presence, the most efficient starting point is to assess their current jurisdictions. If the primary goal of an overseas tokenization strategy is to accumulate first-hand experience as early as possible, setting up in a completely new jurisdiction represents a very high barrier in terms of time and capital.

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 allowed licensed virtual asset exchanges to engage in secondary trading, completing the full chain from issuance to circulation. Infrastructure like HSBC Orion is already live, 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, compliance with transitional provisions must be addressed.

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 guidelines in December 2025, providing clearer direction. The Variable Capital Company (VCC) structure facilitates asset segregation, making it particularly suitable for fund structures. However, even for services targeted at overseas clients, Singapore imposes strict licensing requirements, resulting in a high entry barrier.

United States: Regulatory Clarity and Efficient Listing Path

A joint interpretation released by the SEC and CFTC in 2026 clarified the asset classification framework. The cost of directly applying for a license as an issuer remains high, but efficient issuance is possible through vertically integrated platforms like Securitize: using the Regulation D exemption for U.S. accredited investors and the Regulation S exemption 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 an in-platform investor network 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 a large volume of regulatory documents.

4. Bypassing Jurisdictions

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

This path does not invest the time and capital required to establish a physical base. Instead, it lowers the entry barrier by partnering with on-chain platforms that have built-in compliance capabilities, or by borrowing their structural logic and using such infrastructure. The direct path answers "where to operate," while the on-chain native path answers "how to structure the transaction."

Representative examples are as follows. Ondo Global tokenizes U.S. securities through a bankruptcy-remote Special Purpose Vehicle (SPV) incorporated in the British Virgin Islands, minimizing friction with U.S. securities regulations using the Regulation S offshore exemption. Ondo also operates its own secondary market, Ondo Global Markets, directly handling trading of the issued tokens. Plume Nest holds a Class M DABA license from the Bermuda Monetary Authority through Plume's 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 checks. Additionally, an affiliated company is registered with the U.S. SEC as a transfer agent, providing a second layer of security 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 substantively close to jurisdiction-based 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 already-validated infrastructure. Another advantage is particularly prominent when compared to jurisdiction-based platforms, whose closed ecosystems may limit secondary market liquidity. On-chain native platforms, designed for scalability, can organically connect with DeFi liquidity pools.

However, the complexity of structural design is a risk that needs careful consideration. The open nature of such platforms allows for a wider range of products, but lacks the mature regulatory guidance of the jurisdiction-based path for core structural decisions like issuance design. The structural differences of such platforms vary by platform rather than by jurisdiction, potentially creating an operational burden for traditional financial institutions. Therefore, assessing the availability of a local partner for the respective platform in the target region is a necessary preparatory step.

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

Large financial institutions in the United States are already leading the market, either building their own platforms or directly accumulating experience on Canton, Solana, and Ethereum. For financial institutions still in jurisdictions with regulatory gaps, starting an overseas RWA business means redesigning the entire value chain locally, from establishing a base to issuance and distribution, with a preparation period typically lasting six months to over a year.

Consider a hypothetical case to illustrate this process: a medium-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 licensing 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 a change in license conditions or additional filings are required.

Step 2: Select platform and infrastructure. To shorten the time needed to apply for its own license, Company A considers conducting business through mature platforms like DigiFT. Vendor due diligence covers the platform's license validity, supported asset types, custody partners, and investor restrictions. During the contracting phase, legal review covers the issuance structure designed to fit the platform's specifications, allocation of responsibilities, and governing law.

Step 3: Compliance and product design. This phase finalizes the product structure of the bonds to be tokenized, including the underlying assets, investor rights, and governing law. The standard approach is to use the Regulation S exemption 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 investors is justified under securities law before proceeding to the drafting and approval of offering 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 handling the on-chain tokens. Relevant legal opinions are obtained through external counsel. Operational details must also be finalized, including the interest payment schedule, settlement currency (USD or stablecoin), and redemption mechanism.

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

The overseas tokenization strategy outlined above 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 in bypassing jurisdictional boundaries, effectively leave the space of feasible options open. Legal review will be the most time-consuming and costly barrier in any path. However, waiting for a complete regulatory framework is not the only answer. The ability to quickly outline a feasible path and accumulate experience through execution is more critical than any other factor. The reason: the essence of a tokenization business lies not in the technical design, but in the successful completion of the entire sales process.

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