Tiger Research: Three Strategies for Financial Institutions to Keep Up with the Tokenization Wave

The real-world asset tokenization market has reached $25 billion to $36 billion! A complete guide for financial institutions to go global and seize the first-mover advantage. Written by: Tiger Research Translated by: AididiaoJP, Tiger Research A newly released in-depth report points out that the real-world asset tokenization market is growing rapidly, but many jurisdictions still lack a comprehensive regulatory framework. Local financial institutions must make a strategic choice among waiting for domestic legislation, using regulatory sandboxes for limited experimentation, or being the first to enter overseas mature markets. Before formally entering, institutions must thoroughly prepare in six core areas, including jurisdiction selection, license acquisition, asset definition, target investor scope, and the design of settlement mechanisms and operational arrangements. The core goal is to choose the path best suited to their own situation and accumulate real operational experience as quickly as possible. There are two main paths: directly enter a jurisdiction with mature regulations, or adopt a technical route using an on-chain native platform. Waiting, experimenting, or going global? As of the first half of 2026, the real-world asset tokenization market has reached approximately $25 billion to $36 billion. This market has achieved significant efficiency improvements through tokenization—including automated interest payments and redemptions, shortened settlement cycles, and expanded customer bases—thus attracting the attention of a large number of institutional investors. However, financial institutions still face the practical obstacle of regulatory gaps. Although there is no explicit prohibition of tokenization, the legal framework for distributed ledger records to have legally binding effect is still incomplete, and investor rights lack adequate protection. Against this backdrop, financial institutions generally adopt three strategies: waiting for domestic legislation—this approach is conducive to risk management but may miss the opportunity to capture early market share. Using regulatory sandboxes: allows limited experimentation, but is typically restricted to small-scale scenarios such as fractionalized investments, making it difficult to scale to standardized securities issuance. Being the first to enter overseas markets: issuing digital bonds in jurisdictions with mature regulations, accumulating performance and track record abroad, thereby building a competitive advantage. Since real-world asset business is inherently global, financial institutions need to accumulate operational capabilities in different regulatory environments. For jurisdictions with incomplete regulations, institutions have even more reason to accumulate practical experience in overseas markets early to stay ahead of peers. Tokenization is not magic International real-world asset operation is not the result of isolated decisions, but a series of interlocking choices. Tokenization is not magic; it is the process of migrating existing financial instruments to a new infrastructure. This process requires higher precision than traditional issuance, not lower. Before deciding to enter, institutions should honestly assess their readiness in the following six areas: Establishing an offshore base: determining how to leverage key jurisdictions such as Hong Kong, Singapore, or the United States—whether through existing entities, setting up new entities, or partnering with local companies. New entities offer stronger control but require significant resource investment; partnerships allow faster entry but have limited internalization of core capabilities. License acquisition: meeting the license requirements of the target sales jurisdiction. Options include direct application (time-consuming and costly) or leveraging an existing platform's license (faster, but the issuance structure must be designed according to the platform's specifications). Asset definition: the choice of asset type for tokenization determines the barrier to entry. Standardized securities like bonds have mature structures and are relatively easy to implement; non-standard assets such as real estate or trade receivables require more time for legal review and structural design. Target investor scope: a common strategy is to target all jurisdictions except the United States. Sales to non-U.S. investors can rely on the Regulation S offshore exemption; including U.S. investors requires additional compliance with Regulation D and other requirements, increasing structural complexity. Additionally, many security token offerings (STOs) and real-world asset platforms are limited to qualified or institutional investors, so the sales strategy must be determined simultaneously with the investor scope. Settlement currency and payment process: deciding whether to accept local currency, USD, stablecoins, or wholesale central bank digital currency for settlement. This concerns not only currency selection but also directly affects investor accessibility, custody structure, and final revenue. For example, accepting stablecoins introduces exchange requirements and potential additional costs. Other operational requirements: depending on the structure, many matters such as blockchain selection, custody, on-chain operations, and post-issuance governance need to be considered. In particular, it is necessary to clarify who controls interest payments and redemptions, register management, and the ability to force transfer or freeze tokens in the event of an incident—these are similar to the operational requirements of traditional financial instruments. Even after the structure design is complete, the work is not over—the securities must be successfully sold and investors found. Choosing an operational location Jurisdiction selection is a strategic decision that requires weighing both regulatory fit and operational efficiency. For institutions with an existing offshore presence, the most efficient starting point is to first assess current jurisdictions. If the main goal of the offshore tokenization strategy is to accumulate practical experience as early as possible, then setting up a new jurisdiction base from scratch has high barriers in terms of time and cost. Hong Kong: leading in regulatory completeness and enforceability. Security tokens are already regulated under the existing Securities and Futures Ordinance. The SFC circular in April 2026 allows secondary trading on licensed virtual asset exchanges, completing the loop of issuance and distribution. Infrastructure such as HSBC Orion is already operational, with strong policy support including HKMA subsidies for issuance costs. However, it should be noted that if the legislation introducing new virtual asset dealer and custodian licenses in 2026 proceeds as planned, compliance issues regarding transitional provisions deserve attention. Singapore: framework precise, regulation clear. Singapore strictly follows the principle of 'same activity, same risk, same regulation.' The MAS revised its tokenization guidelines in December 2025, providing clearer guidance. The Variable Capital Company (VCC) structure facilitates asset segregation and is suitable for fund structuring. However, even for business targeting offshore clients, license requirements are relatively strict, and the barrier to entry is high. United States: regulation clear, market path efficient. In 2026, the SEC and CFTC jointly clarified the asset classification framework. Obtaining a license directly as an issuer is costly, but operating through a vertically integrated platform like Securitize can efficiently utilize exemptions under Regulation D (for U.S. qualified investors) and Regulation S (for offshore investors). BlackRock's BUIDL fund is a typical example of this path. Each jurisdiction has mature platforms that can accelerate local entry. These licensed operators provide regulatory coordination, in-platform fundraising investor networks, and full lifecycle operational infrastructure from issuance to settlement. When evaluating entry into a specific jurisdiction, meeting with leading local platforms to test commercial feasibility is more efficient than first reading a large number of regulatory documents. An on-chain native path that bypasses jurisdictional limitations The previous section discussed the direct approach of establishing legal and physical presence in a specific jurisdiction and obtaining necessary licenses. This section introduces a fundamentally different approach: the on-chain native path, which designs issuance and distribution around the on-chain environment from the start. This approach does not require investing a lot of time and money to establish a physical base, but instead leverages or borrows existing on-chain platform structures with built-in regulatory compliance to lower market entry barriers. The jurisdictional path asks, 'Where will we operate?' while the on-chain native path asks, 'How will we structure the transaction?' Typical examples include: Ondo Global: tokenizes U.S. securities through a bankruptcy-remote special purpose vehicle (SPV) registered in the British Virgin Islands, using the Regulation S offshore exemption to reduce friction with U.S. securities regulation. It also operates its own secondary market, Ondo Global Markets, directly handling trading of the issued tokens. Plume Nest: Plume's Bermuda subsidiary KDAB holds a Class M DABA license from the Bermuda Monetary Authority and operates a regulated on-chain vault. The Plume Nest platform is only accessible to investors who have passed KYB and KYC screening, and its affiliate's SEC transfer agent registration provides a second layer of protection for ownership registration management and distribution. Due to the platform's decentralized design, tokenization outside the licensed structure is also possible, but this path is less suitable for regulated financial institutions. The on-chain native strategy is substantially similar to jurisdictional tokenization, but the execution method differs significantly. The main advantages are fast entry speed and wide coverage: institutions can leverage proven infrastructure to enter the market faster without being tied to a specific base. Another advantage is that, unlike jurisdictional platforms whose closed ecosystems may limit secondary market liquidity, on-chain native platforms built around scalability can naturally connect to DeFi liquidity pools. However, the complexity of structural design is a risk that needs to be weighed. The openness of these platforms allows for a wider range of product types, but in core structural decisions (such as issuance design), they lack the established regulatory guidance that the direct jurisdictional path has. Since different platforms adopt different structures, this may also impose operational burdens on traditional financial institutions. It is worth evaluating whether there is a local contact point for the platform in the target region. Don't wait for regulation; the market won't wait. Large U.S. financial institutions are already leading the market, either building proprietary platforms or accumulating direct experience on networks such as Canton, Solana, and Ethereum. For financial institutions in jurisdictions with incomplete regulations, conducting offshore real-world asset business requires redesigning the entire local value chain from establishing a base to distribution. The preparation period typically takes six months to over a year. The report takes a medium-sized securities company 'Company A' (which already has a Hong Kong entity) as an example, breaking down in detail the process of tokenizing short-term investment-grade bonds for offshore institutional investors: Step 1: Assess the existing base and license status. Use the existing Hong Kong subsidiary to avoid the time and cost of setting up a new entity. Legal counsel reviews the current authorization scope and, if necessary, conducts preliminary consultations with the regulator (e.g., the SFC) to confirm whether license conditions need to be changed or additional filings are required. Step 2: Choose platform and infrastructure. To reduce the time for direct license application, consider operating through a mature platform such as DigiFT. Due diligence covers the platform's license validity, supported asset range, custody partners, and investor restrictions. Legal review is conducted during the contract stage, addressing issuance structure design to meet platform specifications, allocation of responsibilities, and governing law. Step 3: Regulatory compliance and product design. Finalize the product structure of the bonds to be tokenized, including underlying assets, investor rights, and governing law. Standard practice is to target offshore institutional investors outside the U.S., using the Regulation S exemption. Legal opinions must be obtained on compliance with local securities laws in each target jurisdiction, and the logic of excluding local residents must be verified to be reasonable under securities law before proceeding to the drafting and approval of offering documents. Step 4: Design custody structure and on-chain operations. Establish a dual custody arrangement: a global custodian bank handles the physical assets, and a specialized infrastructure handles the on-chain tokens. Obtain legal opinions from external counsel. Also finalize operational details, including interest payment schedules, settlement currency (USD or stablecoins), and redemption mechanisms. Step 5: Issuance, execution, and verification. Execute the actual issuance and sale according to the final structure, and confirm that operational procedures such as interest payments and redemptions run as designed. Structural design is just the starting point; the business is only complete after investors are secured and sales are closed. This offshore tokenization strategy is not limited to the direct path of establishing a base in a specific jurisdiction. Flexible methods that bypass jurisdictional boundaries, such as the on-chain native path, make the choice of feasible paths effectively open. In any path, legal review is the most time-consuming and costly hurdle. However, waiting for a complete regulatory framework is not the only answer. Quickly planning a feasible path and accumulating experience through execution is more important than anything else, because the essence of the tokenization business lies not in technical design, but in completing the full sales process. No one can predict when regulation will ultimately land, and the market will not wait. Now is the time to act.

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