Tokenized Finance: Top 3 Asian Markets

What to Know:

• Japan is advancing custody rules, Hong Kong is standardizing digitally native bond issuance, and Singapore has approved the first retail tokenized fund.
• These developments reduce friction for collateral and settlement near Bitcoin (BTC) and Ethereum (ETH) venues.
• Regulatory timing will dictate how quickly these rails convert into usable liquidity, impacting crypto market dynamics.

Asia is emerging as a key region for integrating traditional finance with digital assets, with developments in Japan, Hong Kong, and Singapore paving the way for increased crypto adoption. These advancements focus on establishing clear regulatory frameworks, promoting the issuance of digitally native bonds, and introducing retail tokenized funds. The convergence of these factors could significantly impact the liquidity and accessibility of cryptocurrencies like Bitcoin (BTC) and XRP.

Japan’s Financial Services Agency (FSA) is creating a pathway that brings crypto closer to traditional financial regulations while reaffirming hardware-segregated custody as the baseline. This reduces legal and operational uncertainty for banks and broker-dealers, potentially expanding the distribution of crypto assets on regulated platforms. With over 12 million exchange accounts and substantial user assets, Japan’s regulatory clarity could drive significant investment into Bitcoin and Ethereum.

Hong Kong has been actively involved in programmatic issuance of digitally native bonds, with the HKSAR Government’s multi-currency green bond being a prime example. The Digital Bond Grant Scheme lowers issuer hurdles and encourages repeat use of digital rails. The compression of settlement times from T+5 to T+1 allows treasurers and funds to keep wallets live for working balances and collateral, which benefits crypto by supporting tokenized cash and credit lines near crypto venues.

Singapore has recently approved the first retail tokenized fund, the Franklin OnChain U.S. Dollar Short-Term Money Market Fund, for retail sale. This move introduces consumer-grade tokenized cash, offering standard investor protections. The collaboration between DBS, Franklin Templeton, and Ripple to list sgBENJI on DBS Digital Exchange further illustrates the integration of tokenized assets with plans to use tokens as collateral and execute swaps versus Ripple’s RLUSD stablecoin.

The impact on crypto markets will likely be through liquidity adjacencies, rather than direct allocation mandates. If exchanges and prime brokers begin accepting tokenized money market fund shares as collateral, users can seamlessly switch between cash-like tokens and Bitcoin or Ethereum within a single operational perimeter. This compressed basis, deepened spot and derivatives depth, and reduced need to move fiat off the platform could be a boon for the crypto markets.

As regulatory frameworks mature and issuance momentum grows in these Asian hubs, the integration of traditional finance with digital assets will likely accelerate. This evolution could lead to tighter spreads, deeper collateral pools, and increased accessibility for cryptocurrencies, benefiting the broader crypto ecosystem.

Related: XRP: Five-Digit Price Powers SWIFT & More?

Source: Original article