RWA Tokenization Hits $36 Billion as Regulatory Gaps Shape Global Strategy

The tokenization of real-world assets (RWA) is accelerating into a multi-tens-of-billions market, but for financial institutions operating in jurisdictions with unclear rules, momentum comes with a hard trade-off: move early and risk legal ambiguity, or wait for domestic legislation and potentially forfeit first-mover advantage. A new report from Tiger Research argues that this decision—whether to wait, pilot within a regulatory sandbox, or expand abroad—will shape who builds durable RWA competitiveness over the next cycle.

In its latest analysis, Tiger Research estimated the RWA market expanded rapidly in the first half of 2026 to roughly $25 billion to $36 billion, as institutions increasingly view tokenization as more than a crypto experiment. By converting cash flows and ownership records into onchain representations, issuers can automate coupon payments and redemptions, shorten settlement windows, and broaden distribution to a wider investor base—all efficiencies that have become increasingly attractive in a world of higher rates and tighter balance-sheet scrutiny.

Yet in many countries, a core legal question remains unsettled: what is the enforceable status of rights recorded on a distributed ledger, and how should investor protection be applied when assets are issued, traded, and serviced through token-based rails? For banks, brokers, and asset managers, that uncertainty can turn product rollout into a compliance and liability minefield, even when underlying assets are traditional and low-risk.

Tiger Research frames the strategic responses in three buckets. The first is to wait until domestic law fully catches up. This approach best controls regulatory risk, but the report warns it can concede the early market to foreign competitors that build track records, distribution, and liquidity before late entrants are cleared to participate.

The second is limited experimentation through a ‘regulatory sandbox’. While sandboxes can provide a controlled environment for proof-of-concept issuance, Tiger Research notes they often constrain products to fractionalized offerings or narrow pilots, leaving institutions short of experience with standardized, securities-based RWA at scale.

The third path—treated as the most aggressive but potentially most effective—is to enter overseas markets where tokenized securities frameworks are more mature. Under this approach, issuers launch products such as digital bonds in established jurisdictions first, building operational history and references that can later be leveraged for broader expansion. In practice, the report suggests, market credibility may increasingly hinge on demonstrated execution rather than domestic legal timelines.

Crucially, Tiger Research cautions against viewing tokenization as a plug-and-play technology upgrade. Moving existing financial products onto new infrastructure requires careful structuring, not ‘magic’. Before pursuing overseas issuance, the report says firms should validate at least six core requirements: whether they can secure an offshore base; how licensing will be obtained in the target distribution region; which assets are suitable for tokenization; the intended investor scope; the settlement currency and end-to-end fund-flow design; and the operating model for post-issuance functions including custody, registry management, redemption, and incident response.

Asset type is a major determinant of complexity. Standardized instruments such as bonds tend to be faster to tokenize because legal rights and cash-flow structures are well defined. By contrast, non-standard assets—such as real estate or receivables—often require heavier diligence around title, priority of claims, and enforceability, increasing time and cost. Investor design can be equally decisive. A common route for cross-border distribution is to target non-U.S. investors and rely on Regulation S (‘Reg S’) exemptions, but including U.S. investors can trigger additional requirements such as Regulation D (‘Reg D’), increasing structural and compliance complexity.

Settlement currency, Tiger Research adds, is not a mere operational preference. Choosing between local currency, U.S. dollars, stablecoins, or wholesale central bank digital currency (CBDC) frameworks can alter investor accessibility, FX costs, custody structures, and ultimately profitability. While stablecoins can improve onchain settlement speed, they may introduce additional conversion steps and fees that require issuers to rework the product’s economics and controls.

On jurisdictional hubs, the report highlights Hong Kong, Singapore, and the United States as major centers for RWA issuance and distribution. Hong Kong is described as particularly advanced in connecting issuance and secondary trading, with security tokens governed within its existing securities and futures framework. Tiger Research points to greater institutional completeness following an April 2026 Securities and Futures Commission (SFC) circular that allowed secondary trading on licensed virtual asset exchanges, alongside infrastructure such as HSBC’s Orion platform and policy support including Hong Kong Monetary Authority (HKMA) cost subsidies.

Singapore, by contrast, is characterized by its ‘same activity, same risk, same regulation’ approach, offering detailed legal foundations and clearer guidance. The report highlights the Variable Capital Company (VCC) structure as an advantage for fund-style designs due to its utility for asset segregation. However, strict licensing expectations—particularly for offshore servicing—can raise the barrier to entry.

The United States is assessed as having improved asset classification clarity following a joint interpretive framework by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in 2026, according to Tiger Research. The report notes that vertically integrated platforms such as Securitize may enable relatively efficient issuance using Reg D and Reg S structures. BlackRock’s BUIDL is cited as a prominent example of tokenized product execution under established distribution constraints.

Beyond building a physical presence in a new jurisdiction, Tiger Research also outlines an alternative ‘onchain-native’ route: instead of establishing local entities and licensing from scratch, issuers can leverage platforms that already embed regulatory structures and design issuance and distribution atop those rails. The key shift, the report argues, is from “where to operate” to “how to structure” a compliant, sellable product.

Examples include Ondo Global and Plume Nest. Tiger Research says Ondo Global has minimized friction with U.S. rules by tokenizing U.S. securities while using a bankruptcy-remote special purpose vehicle (SPV) in the British Virgin Islands and relying on Reg S for offshore distribution. Plume Nest, the report adds, operates a compliant onchain vault through a Bermuda subsidiary, integrating investor screening and ownership registry management to balance regulatory alignment with onchain scalability.

Still, the onchain-native approach comes with trade-offs. While it can accelerate speed to market and make connections to DeFi liquidity easier than jurisdiction-centric models, Tiger Research warns that complexity and operational burden rise quickly. Many regions still lack explicit guidance for these hybrid structures, which can be uncomfortable territory for traditional financial institutions with conservative risk appetites. Even if technical detours exist, legal review and operational control remain non-negotiable.

To illustrate execution realities, Tiger Research models a hypothetical case: a mid-sized securities firm with a Hong Kong entity tokenizes short-term investment-grade bonds and sells them to offshore institutions. The report breaks the process into five stages—using the offshore base and validating licensing, choosing an issuance platform, designing a compliant product and regulatory posture, building custody and onchain operating workflows, and completing issuance with post-launch verification. Preparation alone can take six months to more than a year, and the project is not complete until distribution and sales are executed in full.

The overarching message is that RWA is less about issuance technology and more about building ‘sellable financial products’ with robust operational plumbing. Without pre-defined mechanisms for registry management, coupon payments, redemptions, forced transfers, or freeze authority, tokenized structures may look functional in a demo but fail in real markets under stress events or disputes.

Tiger Research ultimately concludes that institutions in under-regulated jurisdictions risk falling behind if they remain passive. As large U.S. financial firms accumulate real-world implementation experience across infrastructures such as Canton, Solana (SOL), and Ethereum (ETH), hesitation elsewhere could accelerate the shift of RWA leadership overseas. In Tiger Research’s view, the next phase of competition may be determined less by how quickly laws are written than by how quickly firms learn to execute.