Tiger Research: Moving RWA Tokenization Overseas First

Core Takeaways

This article is from Tiger Research. The RWA market is rapidly growing, but many jurisdictions still lack adequate regulatory frameworks. Financial institutions in these regions must make a strategic choice between three options: waiting for domestic legislation, using regulatory sandboxes, or entering overseas markets directly.

Cross-border RWA operations requireextremely high precision. Before entry, thorough preparation is needed in six core areas, covering jurisdiction selection, licensing, asset definition, investor scope, and the design of settlement and operational arrangements.

The core goal is to accumulate real operational experience by choosing a path that fits one's own situation. The two main paths are: directly entering a jurisdiction with mature regulations, and adopting the technical path of a native on-chain platform.

1. Wait, Experiment, or Go Abroad

As of the first half of 2026, the Real World Asset (RWA) tokenization market has grown to an estimated value of $25 billion to $36 billion. Its clear efficiency improvements, including automated interest payments and redemptions, shorter settlement cycles, and broader customer coverage, have attracted continuous attention from institutional investors.

However, financial institutions still face real obstacles within the regulatory vacuum. While tokenization is not explicitly prohibited, the legal framework needed to grant legal effect to Distributed Ledger Technology (DLT) records has not yet been formed, leaving investor rights without sufficient protection. In response, financial institutions choose between three broad directions: Waiting for domestic legislation is beneficial for risk management but carries the significant risk of missing early market positions; Using regulatory sandboxes allows for limited experimentation, but only in restricted areas like fragmented investments, without the ability to expand to standardised securities issuance; Entering overseas markets first means issuing digital bonds in jurisdictions with established regulations, building a track record locally, and competing for early positions using the experience gained abroad.

The RWA market is inherently global, making it crucial to build operational capabilities across different regulatory environments. While overseas expansion does have real constraints, it is precisely those financial institutions whose home regulations are still lacking that have the most reason to go abroad and accumulate first-hand experience before their peers.

2. Tokenization is Not Magic

Cross-border RWA business is not a product of isolated decisions. The choices involved are interconnected, with the outcome of the previous step determining the options for the next. Tokenization is not magic; it is the process of migrating existing financial instruments to a new type of infrastructure, and this process demands even higher precision than traditional issuance, not less.

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

First, Establishing an Overseas Base. Institutions must determine how to utilize key jurisdictions like Hong Kong, Singapore, or the U.S., and the specific path, whether through an existing entity, a newly established entity, or a partnership with a local institution. A new entity offers greater control but requires significant resources; a partnership allows for faster market entry but limits the depth of internalizing core capabilities.

Second, Licensing. Institutions must meet the licensing requirements of the intended place of sale. The choice is usually between obtaining a license directly (time-consuming and costly) and using an existing platform's license (faster, but requires building the issuance structure according to that platform's specifications).

Third, Asset Definition. Choosing 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. The typical approach is to cover all jurisdictions except the U.S. 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 STOs and RWA platforms restrict sales to accredited or institutional investors, so the sales strategy must be determined concurrently with the investor scope definition.

Fifth, Settlement Currency and Payment Process. 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 that determines 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 further considerations including blockchain choice, custody, on-chain operations, and post-issuance governance. Institutions must specifically determine who controls interest payments and redemptions, register management, and the ability to force transfer or freeze tokens when events occur. These items correspond to the operational requirements of traditional financial instruments.

Tokenization is not magic. The work is not finished 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 an existing overseas presence, the most efficient starting point is to evaluate their current jurisdictions. If the primary goal of the overseas tokenization strategy is to accumulate first-hand experience as early as possible, re-establishing a base in a completely new jurisdiction presents a very high time and capital barrier.

Hong Kong: Regulatory Completeness and Enforceability

Hong Kong is the most advanced first-mover market in terms of implementation. Security tokens are regulated under the existing Securities and Futures Ordinance. A circular issued by the Securities and Futures Commission (SFC) in April 2026 allows licensed virtual asset exchanges to engage in secondary trading, completing the chain from issuance to circulation. Infrastructures like HSBC Orion are already live, and policy support is ample, including subsidies for issuance costs from the Hong Kong Monetary Authority (HKMA). Institutions should note that if legislation introducing new licences for virtual asset dealers and custodians progresses as planned in 2026, attention must be paid to compliance with transitional provisions.

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, making it particularly suitable for fund structures. However, even for services targeting 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 applying for a license directly as an issuer remains high. However, through vertically integrated platforms like Securitize, an efficient issuance path is achievable: 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 a platform-based investor network for fundraising, and operational infrastructure covering the full 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 documents.

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 native on-chain 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 borrows their structural logic, using such infrastructure to lower the entry barrier. The jurisdictional path from the previous section answers "where to operate," while the native on-chain 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, using the Regulation S offshore exemption to minimize friction with U.S. securities regulations. Ondo also operates its own secondary market, Ondo Global Markets, which directly handles trading of the issued tokens. Plume Nest holds a Class M DABA license from the Bermuda Monetary Authority through Plume's Bermudian 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 US 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 native on-chain strategy is substantially similar to jurisdictional tokenization in essence but differs significantly in execution. Its primary advantages are speed to market and breadth of coverage: institutions are no longer limited to a specific base but can use already proven infrastructure to reach the market faster. Another advantage is particularly prominent when compared to jurisdictional platforms: the closed ecosystems of jurisdictional platforms may limit secondary market liquidity, whereas native on-chain platforms designed for scalability can organically interface with DeFi liquidity pools.

However, the complexity of structural design is a risk that requires serious consideration. The open nature of such platforms allows for a broader range of products, but lacks the mature regulatory guidance available for jurisdictional paths in core structural decisions like issuance design. The structural differences in these platforms are determined by the platform rather than by the jurisdiction, potentially creating an operational burden for traditional financial institutions. Therefore, assessing the availability of local service providers supporting the chosen 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 U.S. are already leading the market, either building their own platforms or directly gaining experience on Canton, Solana, and Ethereum. For financial institutions still in regulatory gray zones, launching an overseas RWA business means redesigning the entire value chain locally, from establishing a base to issuance and distribution, with a preparation period typically taking six months to over a year.

The following hypothetical case reconstructs this process: "Company A," a mid-sized securities firm, tokenizes short-term investment-grade bonds and sells them to overseas institutional investors, leveraging its existing entity in Hong Kong.

Step One: Assess Existing Base and License Status. Company A uses its existing entity (its Hong Kong subsidiary) to avoid the time and cost of establishing 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 preliminary inquiries with the regulator (here, the Hong Kong SFC) to confirm if license conditions need modification or additional filings are required.

Step Two: Choose Platform and Infrastructure. To shorten the time required for applying for a license independently, Company A considers conducting business through established 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, liability allocation, and applicable law.

Step Three: Compliance and Product Design. This stage finalizes the product structure of the bonds to be tokenized, including the underlying asset, investor rights, and applicable law. The standard practice is to use the Regulation S exemption to sell to overseas institutional investors outside the U.S. Legal opinions regarding compliance with local securities laws must be obtained for each target jurisdiction. Company A must also confirm the legal justification under securities laws for excluding its domestic residents before proceeding to the drafting and approval stage of the issuance documents.

Step Four: Design Custody Structure and On-Chain Operations. Company A establishes a dual custody arrangement: one global custodian bank holds the underlying assets, while specialized infrastructure takes custody of the on-chain tokens, with relevant legal opinions obtained from 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 Verification. Company A executes the actual issuance and sale according to the finalized structure and subsequently confirms that operational processes like interest payments and redemptions function as designed. Structural design is just the starting point; the business is completed only when investors are in place and the sale is finalized.

The above overseas tokenization strategy is not limited to the direct path of "establishing a base in a specific jurisdiction." Paths like the native on-chain approach, which offer greater flexibility to bypass jurisdictional boundaries, effectively leave the realm of feasible options open. Legal review will be the most time-consuming and costly barrier under 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 is simple: the essence of a tokenization business lies not in the technical design, but in the final completion of the entire sales process.

No one can predict when regulations will ultimately be set, and the market will not wait. The time to take action is now.