Asia Pacific Progresses in RWA Tokenization by 2025

APAC nations such as Singapore, Hong Kong, Australia, and Japan are pushing forward with the tokenization of real-world assets (RWA) through regulatory changes and market adoption.

Regulatory Changes and Market Developments

Why It Matters: Tokenization integrates issuance, settlement, and custody on a unified digital platform, enhancing settlement certitude and auditability. It reduces capital expenditures, boosts transparency in custody, and allows for continuous secondary markets — advantages that benefit issuers, investors, and intermediaries alike.

With advancements in tokenization enhancing cross-border payments, trade finance, and improving speed and transparency, the varying policies across APAC may broaden options for local currency issuance, including China’s RMB, while the USD liquidity remains central. Multi-currency frameworks provide new opportunities for FX hedging and credit enhancements.

Updates:

• Singapore is enhancing standardization and interoperability efforts in fixed income, FX, and fund management under the MAS Project Guardian.
• Hong Kong is proceeding with multi-currency digital bond issues (press release from HKMA) and utilizes its Digital Bond Grant Scheme data to attract private sector transactions.
• Australia is progressing with updates on Project Acacia from ASIC in collaboration with RBA–DFCRC, incorporating live pilots and proof of concepts.
• Japan’s FSA continues to develop the market for STOs and digital securities through public speeches and published documentation.

Overall, the shared goals include enforcing “same risk, same rules,” ensuring ledger interoperability, aligning KYC/suitability/reporting practices, and the availability of central bank money. For individuals involved in DeFi, it is crucial to comprehend wallet connections, gas fees, and comprehensive KYC processes (Japanese citizens must adhere to local legal requirements).

Potential of Interoperability in Realizing East-West Financial Systems

Context: The initial wave of RWA adoption has been predominantly focused on bonds, particularly US Treasuries, where enhanced transparency and traceability have widened the investor pool. Singapore’s MAS Project Guardian hub serves as a collaboration point for public and private entities across borders. Hong Kong is proactively issuing government digital bonds to facilitate market development. Australia employs live pilots to uncover operational challenges while Japan uses established investor protection regulations for gradual scaling.

“The current volume of digital securities is roughly 140 billion yen.” (Japan FSA – FIN/SUM 2025 keynote by Commissioner Ito)

Reports from BeInCrypto indicate that major Chinese financial firms are engaging with the $30 trillion RWA market. There’s also an uptick in RWA activity on XRPL and BNB Chain through tokenized real estate and treasuries. These trends signify increasing institutional involvement and the development of multi-chain ecosystems beyond Ethereum.

Historical Context: Early pilot projects have focused more on redesigning operational and auditing frameworks than providing immediate liquidity. Various national initiatives have worked on aspects like instant settlement, asset-level ownership transfers, and governance of smart contracts, tackling backend hurdles progressively.

Geopolitical Considerations: A “dual-rail” connection between Eastern and Western financial infrastructures is feasible once interoperability standards are established. Nonetheless, challenges such as custody liability, compliance costs, and data sovereignty concerns present significant obstacles.

In the private sector, notable asset managers, commercial banks, and infrastructure entities are increasing their participation. As tokenized US Treasuries, sovereign digital bonds, and tokenized funds gain traction, bridging gaps in issuance-distribution-custody via shared ledgers and API connections becomes imperative.

The Significance of Interoperability, Data Locations, and Sovereignty

Future Focus: Primary areas of concern include establishing connections with central bank money (wholesale only), aligning accounting and tax treatments, developing secondary markets, ensuring reliable price discovery, and achieving consensus on interoperability standards (including messaging, identity, and data models).

Potential Dangers: Challenges encompass gaps in interoperability, inconsistent enforcement of KYC/AML and suitability rules, operational risks associated with smart contracts, and uncertainties regarding data locality and sovereignty.

“As per the reporting deadline on 31 May 2025, only three DLT MIs have received authorization under the DLT Pilot Regime.” (ESMA Report on DLT Functionality and Review – Art.14)

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