Asia's Tokenization Boom Attracts Global Capital, Shifts Investment Landscape

Asia’s leadership in tokenization is drawing growing attention from global investors, with regulatory clarity in the region attracting capital that was once on the sidelines. This shift is driven by the increasing adoption of digital assets and blockchain technology, which offer enhanced security and efficiency in financial transactions. As more investors and institutions in Asia embrace tokenization, traditional financial hubs in the West are feeling the impact. This trend is not only altering the dynamics of project finance but also influencing the broader investment landscape, as construction industry leaders and infrastructure investors reassess their strategies in response to the growing popularity of digital assets.

Maarten Henskens, head of protocol growth at Startale Group, highlighted the distinct yet complementary approaches taken by Japan and Hong Kong to advance real-world asset (RWA) adoption. Japan’s regulatory framework has been deliberate and forward-looking, establishing a strong foundation of institutional trust. For instance, MUFG’s infrastructure for security token issuance is a good example of how the ecosystem is maturing. Japan’s Payment Services Act (PSA) also allows trusted stablecoins to hold up to 50% of their reserves in low-risk government bonds and term deposits, demonstrating a thoughtful approach to regulation.

In contrast, Hong Kong has moved swiftly, launching the Ensemble Sandbox as a fast-track regulatory innovation hub. While Japan is building long-term depth, Hong Kong is showing how agility can bring experimentation to life. This regulatory agility has attracted global investors and fintech firms, further accelerating the flow of capital from the West to Asia.

The rise of tokenized bonds and ETFs is playing a key role in bringing traditional investors into crypto markets. In Japan, real estate security tokens are making previously closed markets accessible to retail investors, sometimes more so than traditional J-REITs. Tokenization streamlines fund administration and increases transparency, allowing asset managers to connect directly with end-users. This efficiency, paired with improved transparency, could make these products compelling to traditional investors who might not otherwise enter the crypto space.

Cross-border interoperability is the next major milestone in the tokenization boom. Seamless and compliant movement of tokenized assets across jurisdictions will be critical for scaling adoption. In Asia, this means linking infrastructure across countries like Japan and Hong Kong, while globally, regulatory frameworks must reflect the technical realities of tokenized finance, especially around settlement, compliance, and custody.

Dubai has also been making strides in tokenization. The city’s regulatory authorities have introduced progressive frameworks that encourage the issuance and trading of tokenized securities, attracting global investors and fintech firms. In May, the Virtual Asset Regulatory Authority, Dubai’s crypto regulator, updated its guidelines to include provisions for RWA tokenization. These rules give issuers and exchanges a clear path to launch and trade tokenized real estate assets. Last month, the Dubai Land Department, in collaboration with VARA and top developers, successfully tokenized and sold two apartments, with the entire offering selling out within minutes. Buyers came from over 35 countries, and notably, 70% were first-time real estate investors in Dubai.

This trend towards tokenization is expected to continue, further accelerating the flow of capital from the West to Asia. As more regions optimize for different outcomes, the network effect of innovation in one jurisdiction sparks progress in another. Different regions may optimize for different outcomes, and that’s a strength, not a liability. This shift is not only altering the dynamics of project finance but also influencing the broader investment landscape, as construction industry leaders and infrastructure investors reassess their strategies in response to the growing popularity of digital assets.