Tokenization is rapidly emerging as a transformative force in financial markets across Asia Pacific, reshaping the way assets are managed, traded, and valued. By converting physical and intangible assets into digital tokens on decentralized ledger (DLT) platforms, this innovative technology unlocks new opportunities for fractional ownership, greater liquidity, and enhanced market efficiency.
Asia Pacific is positioning itself at the forefront of digital asset tokenization. As of 2024, 37% of the region’s asset managers had initiated tokenization projects, compared to 39% in North America and 27% in Europe.[1] Jurisdictions such as Singapore, Hong Kong, and China are also becoming key hubs, supported by evolving government policies, legal frameworks, regulatory structures, and market infrastructure.[2]
What is tokenization?
Tokenization works by breaking down an asset's value into smaller, more manageable units, each represented by a digital token. These tokens serve as verifiable claims of ownership or rights to the underlying asset.
The tokenization process typically involves several key steps. It begins with token issuance, where the asset owner or issuer creates digital tokens representing the asset on a blockchain platform. These tokens are then recorded and tracked on a distributed ledger, ensuring secure, immutable, and transparent documentation of transactions and ownership changes.
Many platforms also integrate smart contracts – self-executing agreements with predefined terms directly written into code. These smart contracts automate various functions, such as dividend distribution, governance voting, and regulatory compliance checks, enhancing efficiency and minimizing the need for intermediaries.
Tokenization applies to a wide range of asset types, including digital-native assets (like non-fungible tokens (NFTs) and cryptocurrencies) and real-world assets (RWAs) (like real estate, bonds, and commodities).
RWAs are physical or financial assets with inherent value, including commodities, bonds, real estate, and equities. These assets form the foundation of traditional finance but often suffer from inefficiencies, such as limited accessibility, slow transactions, and high costs due to reliance on intermediaries.
RWA tokenization is the process of representing these assets as digital tokens on a DLT platform, such as a blockchain. This process enables secure, transparent, and verifiable ownership records, paving the way for greater integration between traditional finance and decentralized finance (DeFi) ecosystems.
Currently, a wide range of assets are being tokenized, reflecting the versatility and potential of this technology. Common tokenized assets include real estate, bonds, gold, and stablecoins.
Making real estate investments more accessible
In real estate, tokenization is addressing liquidity challenges in property markets through fractional ownership. This approach allows investors to own a portion of high-value real estate assets, significantly lowering the entry barrier for individual investors. In Singapore, several projects have demonstrated the potential of tokenized real estate. For instance, ADDX, a regulated tokenization platform, has been facilitating blockchain-based investments for different asset types, including real estate, across Asia Pacific, the Middle East, and North Africa markets since 2017.[3]
Accelerating the trading of fixed income
Tokenization offers significant potential for financial instruments such as corporate and treasury bonds. According to a report by the Hong Kong Monetary Authority, by digitizing the bond issuance process, tokenization can streamline issuance, accelerate settlement times, eliminate the need for intermediaries, and allow for fractional ownership. These capabilities make bond tokenization a promising innovation for enhancing issuance efficiency and increasing market liquidity.[4]
Tokenization could be particularly beneficial for emerging markets, where bond markets are typically less liquid. In Asia Pacific, several countries are actively exploring their applications. Singapore's Project Guardian is developing standardized, shared, and open-source protocols for tokenized securities, including bonds.[5] Meanwhile, in 2023, the Philippines launched its first tokenized treasury bond offering, aiming to raise PHP10 billion (US$180 million).[6] This initiative seeks to democratize access to government securities for Filipino investors, reduce settlement risks and costs, and foster a more inclusive local bond market.
Democratizing gold ownership
Gold tokenization is making precious metals more accessible by lowering entry barriers and enabling ownership without the need for physical handling. Meld Gold, an Australia-based company leveraging the XRP Ledger (XRPL), converts gold and other precious metals into digital certificates, each representing one gram of metal.[7] The platform allows investors to own physical commodities in a purely digital form, with each certificate fully backed by tangible assets, ensuring both security and authenticity – challenges that traditional gold markets often face. Unlike exchange-traded funds (ETFs), which provide indirect exposure, gold tokenization enables investors to buy and trade fractional quantities while retaining direct ownership of the physical metal.
Enhancing real-time payments with stablecoins
Digital payment tokens, such as fiat- and gold-backed stablecoins, are also being used for real-time settlements and intraday liquidity management. One example is the newly launched USD-denominated stablecoin, RLUSD, which aims to bridge traditional finance and digital assets by facilitating instant settlement and providing liquidity for remittance.[8] This stablecoin offering is designed to enhance operational efficiency in transaction banking and support real-time transfers for liquidity and risk management. RLUSD is available on multiple global exchanges, including Uphold, Bitso, and MoonPay, with more platforms expected to follow.[9]
Advantages of tokenization
The above-mentioned use cases demonstrate several advantages of tokenization, from lowering barriers to entry for investing to improving liquidity.
Expanding access to capital
In capital markets, tokenization has the potential to democratize capital raising for small businesses, which typically raise money via equity sales or debt issuance. By enabling fractional ownership, increasing accessibility, reducing costs, and enhancing liquidity, tokenization aligns with the core purpose of efficient capital allocation. This innovation can make it easier and less expensive for small businesses to access funding.
Empowering a wider range of investors
Tokenization is also improving access to markets through fractionalization. By dividing assets into smaller, more affordable units, tokenization allows smaller investors to participate in markets that were previously out of reach. This approach enables a wider range of investors to engage with previously exclusive investment opportunities, breaking down traditional barriers to entry into various asset classes.
Enhancing operations
Operational efficiency is another benefit of tokenization. According to the CFA Institute, “tokenization can lead to cost and time savings, particularly where a system of intermediaries and manual processing is currently required, e.g., middle and back-office operations, clearing and settlement, distribution, and regulation compliance.”[10] By leveraging DLT, financial transactions can be 24/7, reducing reliance on intermediaries and enabling near-instant settlement. This represents a major advancement in traditional market operations, which are constrained by banking hours, multiple intermediaries, and lengthy settlement processes.
Simplifying cross-border transactions
Tokenization also addresses the complexity of cross-border settlements, particularly in securities transactions, through blockchain transparency and programmability. The technology enables direct connections between financial institutions and securities depositories within a blockchain network, facilitating more efficient Delivery versus Payment (DvP) processes. DvP ensures that the transfer of securities occurs simultaneously with the corresponding payment, reducing settlement risks associated with international investments. Blockchain-based tokenization can potentially reduce transaction costs and settlement times from days to minutes. This approach not only simplifies cross-border securities transactions but also enhances other types of settlements, including conditional payments, asset transfers, and corporate actions.
Improving liquidity
The technology also attracts investors by improving liquidity in traditionally illiquid markets. By enabling fractional ownership and increasing accessibility, tokenization can facilitate more frequent trading of assets that typically lack active secondary markets. While this innovation has the potential to enhance market efficiency and broaden investor participation, its impact on asset liquidity and value ultimately depends on demand, trading infrastructure, and regulatory frameworks.
Challenges to widespread tokenization adoption
Despite its promising potential, several barriers hinder the widespread adoption of tokenization in Asia Pacific. These challenges span technological limitations, security concerns, regulatory uncertainty, and market hesitancy – each requiring targeted solutions for tokenization to achieve mainstream adoption.
Integration with existing financial systems
One of the primary hurdles is the integration of tokenized assets with legacy financial systems. Many traditional institutions rely on outdated infrastructure that is not inherently compatible with blockchain-based tokenization platforms. Achieving interoperability often requires significant technological upgrades and process overhauls, which can be costly and time-consuming. This challenge is particularly pronounced for larger financial institutions, where adapting to decentralized technologies may conflict with established operational frameworks.
Security and key management risks
Security concerns remain a major impediment to adoption. While blockchain technology offers robust security features, vulnerabilities in smart contracts and tokenization platforms can expose investors to cyber threats. Additionally, private key management is a critical issue – losing access to a private key can result in permanent loss of tokenized assets. For institutional investors, ensuring the secure holding of private keys and transfer of digital assets is essential, but current solutions vary widely in terms of effectiveness and regulatory compliance.
Regulatory uncertainty and fragmentation
Regulatory ambiguity poses a significant challenge to tokenization. The lack of standardized frameworks for digital assets across jurisdictions creates inconsistencies in how tokenized securities, real estate, and other asset classes are treated.
For instance, a Singapore-based company tokenizing real estate might face unexpected hurdles when expanding into Hong Kong, where token classification (e.g., securities vs. digital property rights) can impact compliance requirements. These discrepancies complicate efforts to establish a unified, regional tokenized asset market.
Market hesitancy and institutional reluctance
Traditional financial institutions and investors also remain cautious about fully embracing tokenization. A key factor is the limited familiarity with blockchain technology, which leads to uncertainty about its practical applications and potential risks. Many investors also associate tokenized assets with the broader digital asset market, raising concerns about volatility and regulatory scrutiny.
Additionally, the long-term viability of tokenized markets remains uncertain, as the ecosystem is still evolving and lacks a track record comparable to traditional investment vehicles. The perceived complexity of engaging with tokenized assets further deters adoption, particularly among institutions and investors accustomed to conventional financial instruments. Without clearer regulatory guidance, established industry standards, and greater confidence in the resilience of tokenized markets, widespread institutional adoption is likely to remain slow.
Ensuring effective tokenization: Interoperability, security, and compliance
For tokenization to scale, organizations must deploy systems that are interoperable, secure, and compliant with regulatory requirements. Addressing these challenges requires strategic partnerships, robust security frameworks, and solutions that simplify regulatory complexities.
Partnering for interoperability
Interoperability is essential for integrating tokenized assets with traditional financial systems and enabling seamless movement across blockchain networks. Organizations are collaborating with blockchain platforms to create standardized solutions that enhance cross-chain connectivity and improve access to tokenization.
Some blockchain platforms now process up to 1,500 transactions per second on standard hardware, with ongoing upgrades further increasing scalability without compromising security.[11] This enhanced efficiency ensures that institutions can perform fast and reliable transactions at scale, bridging the gap between traditional finance and blockchain ecosystems.
Deploying industry-standard security measures
Security is a fundamental requirement for tokenization, as vulnerabilities in smart contracts, private key management, and custodial solutions can expose investors to risk. Organizations must implement multi-layered security frameworks, incorporating features like multi-signature authentication, offline storage (cold wallets), and advanced encryption protocols to safeguard digital assets.
Rather than building security infrastructure from scratch, institutions can partner with regulated digital custody providers that offer customizable solutions tailored to institutional needs. These partnerships ensure that tokenized assets remain protected while allowing institutions to seamlessly integrate secure custody solutions into their existing workflows.
Navigating regulatory complexity
Tokenization’s regulatory landscape is evolving, with compliance requirements varying across jurisdictions. Organizations must deploy compliance-first solutions that integrate transaction screening, automated reporting, and jurisdiction-specific governance frameworks to meet regional regulations.
Institutional-grade custody solutions provide pre-configured compliance frameworks, ensuring that tokenized assets adhere to legal standards while maintaining transparency. These capabilities help organizations navigate regulatory challenges effectively, fostering confidence in the long-term viability of tokenized markets.
Leveraging tokenization with the right partners
Tokenization is set to transform traditional asset management by democratizing investment access, increasing liquidity, and improving financial efficiency. As the financial landscape evolves, tokenization is more than just a technological innovation – it marks a shift toward a more inclusive, transparent, and interconnected global financial system.
Companies like Ripple are at the forefront of this transformation, providing technologies that enable the seamless tokenization of real-world assets and facilitate efficient cross-border transactions. Institutional investors, custodian banks, and other stakeholders benefit from enhanced liquidity, streamlined operations, and robust security measures for digital asset custody. With fractional ownership, lower transaction costs, and expanded investment opportunities, tokenization is emerging as a key driver of financial innovation. As adoption accelerates, Asia Pacific will play a pivotal role in shaping this evolving landscape.
Discover the future of digital asset custody – download our report, “Future-Proofing Digital Asset Custody: Why Asia Pacific Banks Must Act Now,” created in collaboration with Ripple, to explore tokenization and the latest industry advancements.
[1] Calastone, Asian Asset Managers Taking the Global Lead on Tokenization, 2024.
[2] KPMG and Singapore Fintech Association, The Asset Tokenization C-Suite Playbook, 2024.
[3] ADDX, accessed January 2025.
[4] Victor Leung et al., Hong Kong Monetary Authority, “An assessment on the benefits of bond tokenization,” Research Memorandum 04/2023, Nov 2023, accessed Feb 2025.
[5] Monetary Authority of Singapore, Project Guardian, accessed January 2025.
[6] Global Government Fintech, Philippines offers first tokenised Treasury bonds in digital technology drive, 2023.
[7] Meld Gold, accessed January 2025.
[8] Fintech Singapore, Ripple Launches RLUSD Stablecoin on Global Exchanges Today, 2024.
[9] Ibid.
[10] CFA Institute, “New CFA Institute Research on Tokenization, a New Frontier for Capital Markets?,” Jan 2025.
[11] XRP Ledger, The Most (Demonstrably) Scalable Blockchain, accessed February 2025.