Tiger Research: Three Major Strategies for Financial Institutions to Keep Up with the Tokenization Wave
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Tiger Research: Three Major Strategies for Financial Institutions to Keep Up with the Tokenization Wave
The complete guide for financial institutions to seize the first-mover advantage in global expansion.
Navigating Web3 tides with focused insightsAuthor: Tiger Research
Compiled by: AididiaoJP, Foresight News
A recent in-depth report released by Tiger Research points out that the real-world asset tokenization market is growing rapidly, but many jurisdictions still lack a sound regulatory framework. Local financial institutions must make a strategic choice between waiting for domestic legislation, using regulatory sandboxes for limited experiments, or entering mature overseas markets first.
Before formally entering, institutions must make meticulous preparations 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 accumulate real operational experience as soon as possible by choosing the path best suited to their own situation. There are mainly two paths: directly entering jurisdictions with mature regulations, or adopting the technical route of on-chain native platforms.
Wait, Experiment, or Go Overseas?
As of the first half of 2026, the real-world asset tokenization market size 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—thereby attracting the attention of a large number of institutional investors.
However, financial institutions still face practical obstacles of regulatory gaps. Although there is currently no explicit prohibition on tokenization, the relevant legal framework for distributed ledger records to obtain legally binding effect is still imperfect, and investor rights lack sufficient protection. In this context, financial institutions generally adopt three strategies:
- Wait for domestic legislation: This approach is conducive to risk management, but may miss the opportunity to seize early market share.
- Use regulatory sandboxes: Allows experiments within a limited scope, but is usually limited to small-scale scenarios such as fractionalized investment, making it difficult to expand to standardized securities issuance.
- Enter overseas markets first: Issue digital bonds in jurisdictions with mature regulations, accumulate performance and track record overseas, thereby establishing a competitive advantage.
Since real-world asset business is essentially a global business, financial institutions need to accumulate operational capabilities in different regulatory environments. For jurisdictions where regulations are not yet perfect, institutions have even more reason to accumulate practical experience in overseas markets in advance to lead peers.
Tokenization is Not Magic
International real-world asset operations are not the result of isolated decisions, but a series of interconnected choices. Tokenization is not magic; it is the process of migrating existing financial instruments to new infrastructure, a process that requires higher precision than traditional issuance, not lower.
Before deciding to enter, institutions should honestly assess their level of preparedness in the following six areas:
- Establish an offshore base: Determine how to utilize key jurisdictions such as Hong Kong, Singapore, or the United States, whether through operating via existing entities, setting up new entities, or partnering with local companies. New entities offer stronger control but require significant resource investment; partnership methods allow faster entry but limit the degree of internalizing core capabilities.
- License acquisition: Meet the license requirements of the target sales jurisdiction. One can choose to apply directly (time-consuming and costly) or leverage existing platform licenses (faster, but requires designing the issuance structure according to platform specifications).
- Asset definition: Choosing the type of asset to tokenize determines the height of the entry barrier. Standardized securities such as bonds have mature structures and are relatively easy to implement; while non-standard assets such as real estate or trade receivables require more time for legal review and structure design.
- Target investor scope: The usual strategy is to target all jurisdictions except the United States. Selling to non-US investors can rely on Regulation S offshore exemptions; if US investors are included, additional requirements such as Regulation D must be met, increasing structural complexity. In addition, many Security Token Offerings (STO) and real-world asset platforms are limited to accredited or institutional investors, so the sales strategy must be determined simultaneously with the investor scope.
- Settlement currency and payment process: Decide whether to accept local currency, US dollars, stablecoins, or wholesale central bank digital currency for settlement. This not only concerns currency choice but also directly affects investor accessibility, custody structure, and final revenue. For example, accepting stablecoins will introduce exchange requirements and potential additional costs.
- Other operational requirements: Depending on the structure, many other matters need to be considered, such as blockchain selection, custody, on-chain operations, and post-issuance governance. In particular, it is necessary to clarify who controls interest payments and redemptions, registration management, and the ability to forcibly transfer or freeze tokens in the event of an incident, all of which are similar to the operational requirements of traditional financial instruments.
Even if the structure design is completed, the work is not over—the securities must be successfully sold and investors found.
Choose Operation Location
Jurisdiction selection is a strategic decision that requires weighing regulatory fit and operational efficiency simultaneously.
For institutions that already have an offshore presence, the most efficient starting point is to assess existing jurisdictions first. If the main goal of the offshore tokenization strategy is to accumulate practical experience as early as possible, then setting up a jurisdiction base from scratch has higher thresholds in terms of time and capital.
- Hong Kong: Leads in regulatory completeness and enforceability. Security tokens are already regulated within the existing "Securities and Futures Ordinance" framework. In April 2026, the SFC circular allowed secondary trading on licensed virtual asset exchanges, completing the loop of issuance and distribution. Infrastructure such as HSBC Orion is already in operation, and policy support is strong, including subsidies for issuance costs from the HKMA. However, it should be noted that if the legislation to introduce new virtual asset trader and custody licenses in 2026 proceeds as planned, compliance issues regarding transition clauses are worth attention.
- Singapore: Precise framework, clear regulation. Singapore strictly follows the "same activity, same risk, same regulation" principle. The MAS revised tokenization guidelines in December 2025, providing clearer guidance. The Variable Capital Company (VCC) structure facilitates asset isolation and is suitable for fund setup. However, even for business targeting offshore clients, license requirements are relatively strict, and the entry threshold is high.
- United States: Clear regulation, efficient market path. In 2026, the SEC and CFTC joint interpretation clarified the asset classification framework. Obtaining a license directly as an issuer is costly, but operating through vertically integrated platforms like Securitize allows efficient use of Regulation D (for US accredited investors) and Regulation S (for offshore investors) exemptions. BlackRock's BUIDL fund is a typical case of this path.
Each jurisdiction has mature platforms that can accelerate local entry. These licensed operators provide regulatory coordination, investor networks for fundraising within the platform, and operational infrastructure for the entire lifecycle from issuance to settlement. When evaluating entry into a specific jurisdiction, meeting with leading local platforms to test business feasibility is more efficient than reading a large number of regulatory documents first.
On-Chain Native Path Bypassing Jurisdictional Restrictions
The previous section discussed the direct way of establishing legal and physical presence in a specific jurisdiction and obtaining necessary licenses. This section introduces a fundamentally different method: the on-chain native path, designing issuance and distribution around the on-chain environment from the start.
This method does not require investing a lot of time and capital 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 US securities through a bankruptcy-isolated Special Purpose Vehicle (SPV) registered in the British Virgin Islands, utilizing Regulation S offshore exemptions to reduce friction with US securities regulation. At the same time, it operates its own secondary market, Ondo Global Markets, to directly handle transactions of issued tokens.
- Plume Nest: Plume's Bermuda subsidiary KDAB holds the Bermuda Monetary Authority's Class M DABA license and operates regulated on-chain vaults. The Plume Nest platform is accessible only to investors who pass KYB and KYC screening, and its affiliate's SEC transfer agent registration provides a second layer of assurance 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 methods differ significantly. The main advantage is fast entry speed and wide coverage: institutions can utilize verified infrastructure to enter the market faster without being bound to a specific base. Another advantage is that, unlike jurisdictional platform closed ecosystems which may limit secondary market liquidity, on-chain native platforms built around scalability can naturally connect to DeFi liquidity pools.
However, the complexity of structure 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), there is a lack of existing regulatory guidance like that of the jurisdictional direct path. Since different platforms adopt different structures, it may also bring operational burdens to traditional financial institutions, and it is worth evaluating whether there is a local contact point for the platform in the target region.
Do Not Wait for Regulation, the Market Will Not Wait
Large US financial institutions are already leading the market, either building proprietary platforms themselves or accumulating direct experience on networks such as Canton, Solana, and Ethereum.
For financial institutions in jurisdictions where regulations are not yet perfect, carrying out offshore real-world asset business requires redesigning the entire local value chain from establishing a base to distribution. The preparation period usually 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 to break down in detail the process of tokenizing short-term investment-grade bonds for offshore institutional investors:
- Step 1: Assess existing base and license status. Utilize the existing Hong Kong subsidiary to avoid the time and cost of setting up a new entity. Legal counsel reviews the current scope of authorization, and if necessary, conducts preliminary consultations with regulatory bodies (such as the Hong Kong SFC) to confirm whether license conditions need to be changed or additional filings made.
- Step 2: Select platform and infrastructure. To reduce the time for direct license application, consider operating through mature platforms such as DigiFT. Due diligence covers platform license validity, supported asset scope, custody partners, and investor restrictions. Legal review is conducted at the contract stage, handling issuance structure design to comply with platform specifications, responsibility allocation, 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. The standard practice is to target offshore institutional investors outside the United States, utilizing Regulation S exemptions. Legal opinions must be obtained on local securities law compliance for each target jurisdiction, and the logic of excluding local residents must be verified as reasonable under securities law before entering the drafting and approval of offering documents.
- Step 4: Design custody structure and on-chain operations. Establish a dual custody arrangement: global custodian banks are responsible for physical assets, and professional infrastructure is responsible for on-chain tokens. Obtain legal opinions through external lawyers. At the same time, finalize operational details, including interest payment schedules, settlement currency (US dollars or stablecoins), and redemption mechanisms.
- Step 5: Issuance, execution, and validation. Execute the actual issuance and sales according to the final structure, and confirm that operational procedures such as interest payments and redemptions run as designed. Structure design is just the starting point; the business is only considered complete after investors are secured and sales are completed.
This offshore tokenization strategy is not limited to the direct path of establishing a base in a specific jurisdiction. Flexible methods such as the on-chain native path that bypass jurisdictional boundaries make the choice of viable paths actually open.
In any path, legal review is the most time-consuming and expensive threshold. However, waiting for a complete regulatory framework is not the only answer. Quickly planning viable paths and accumulating experience through execution is more important than anything else, because the essence of tokenization business lies not in technical design, but in completing the entire sales process.
No one can predict when regulation will finally take effect, and the market will not wait. Now is the time to act.
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