These three Asian markets are implementing tokenized finance faster than America.

Japan is refining its regulations on custody, Hong Kong is standardizing the issuance of local digital bonds, while Singapore has just approved the first retail tokenized fund.

The sequence is: regulation, issuance, and cash-like instruments. The relationship with crypto is not a straightforward story, but rather about the infrastructure that reduces friction for securing assets and payments near BTC and ETH exchanges.

Japan: Toward a clearer legal framework for crypto

The Japan Financial Services Agency (FSA) has outlined a roadmap to bring crypto closer to the regulations of the Securities and Exchange Act, while affirming that segregated custody of hardware (cold wallet) is a fundamental standard.

The FSA's discussion report in English states that as of January 2025, Japanese exchanges have more than 12 million accounts and user assets exceeding 5 trillion yen, with cold wallets being the main segregated method.

The FSA also detailed the disclosure requirements for non-fundraising tokens, warning of the development of the decentralized exchange (DEX) and non-custodial wallets, while aiming for consistency in regulations regarding insider trading and the market.

A bill amending the Payment Services Act (PSA) of 2025, which includes asset location requirements and a new type of intermediary business, has been submitted to the Japanese Parliament.

This approach reduces legal and operational risks for banks and brokerage firms, which view custody and liability as barriers. When disclosing information through the exchange for type 2 tokens and aligning behavior regulations with FIEA, distribution can be expanded without the need for a separate framework for each type of asset.

In fact, this opens up a wider range of products on regulated platforms, where BTC and ETH fall within the scope of clear issuance and custody.

Hong Kong: From Experimentation to the Issuance of Local Digital Bonds

Hong Kong has transitioned from testing to the issuance of local digital bonds under the program.

• The HK$6 billion multi-currency green bond 2024 issued by HSBC Orion is settled T+1, compared to the traditional T+5, compatible with CMU and Euroclear infrastructure.
• The Digital Bond Grant Scheme (DBGS) supports up to HK$2.5 million for each eligible issuance, reducing barriers for issuers and encouraging the use of repeat digital infrastructure.

Law firms such as Linklaters and Ashurst are registering corporate digital bonds listed on HKEX and Bank of Communications by the end of 2024–2025, expanding beyond government bonds.

When the payment time for withdrawals is reduced from T+5 to T+1 and the processing of funds is synchronized with the market center, funds and treasuries maintain live wallets to balance and secure assets. This structure also supports BTC and ETH, as the same operational infrastructure can be used for tokenized money and credit limits close to crypto exchanges, serving risk hedging or fund management.

Hong Kong also passed the stablecoin licensing bill (on May 5, 2025), paving the way for regulated payment tokens alongside digital bonds. If fully reserved stablecoins pegged to HKD or USD operate on the same CMU infrastructure, portfolio management can easily rotate and store funds without excessive reconciliation.

Singapore: The first retail tokenization fund

Singapore adds a link for consumers: tokenized money market fund.

• On May 15, 2025, MAS approved the issuance of the Franklin OnChain U.S. Dollar Short-Term Money Market Fund for retail distribution.
• The management system for the transfer of tokenized shares issuance according to the VCC structure, distributed through local channels with standard investor protection.

The total assets under management (AUM) of the Singapore asset management industry reached 6.07 trillion SGD in 2024, an increase of 12.2% compared to the same period, creating a large domestic base for tokenized funds. DBS, Franklin Templeton, and Ripple then collaborated to list sgBENJI on DBS Digital Exchange (9/2025), planning to use tokens as collateral and execute swaps with Ripple's RLUSD stablecoin.

Impact on crypto market liquidity

Tokenization infrastructures impact crypto through liquidity adjacency, not direct allocation.

• If the exchange and main broker accept tokenized money market fund shares as collateral, users can convert between cash-like tokens and BTC/ETH within the same system.
• In Japan, user assets on the exchange over 5 trillion yen can be reallocated to BTC/ETH when regulations are announced and the market matures.
• In Hong Kong, the issuance of digital bonds regularly keeps the organization wallet active, making it easy to expand the tokenized money pool interacting with the crypto market.
• In Singapore, retail tokenization provides a foundational layer connecting banks and exchanges, surpassing the testing phase.

Forecast potential for the next 12–24 months:

• Only 0.5% of the assets on the Japanese exchange have shifted to BTC/ETH → ~¥25 billion (~165 million USD).
• New NISA capital flow increases by 1% → +100–200 million USD. Total base: 250–400 million USD.
• A clearer legal framework for ETF-like wrappers → capital flow could reach several billion USD.

In Hong Kong, if issuing a batch of HKSAR 5–10 billion HK$, plus 2–4 corporate bonds of 1–3 billion HK$ each → the institutional wallet maintains operations. 1–2% of the balance participates in tokenization → 100–300 million USD on-chain near the crypto exchange.

In Singapore, 0.1% AUM 6.07 trillion SGD → ~6 billion SGD (~4.4 billion USD) tokenized. Only 2–5% used as collateral near crypto → adjacent liquidity ~90–220 million USD.

Conclusion

• When regulations, subsidies, and the legal framework are finalized, wallets and tokenized money will become standard operating tools, not just experiments.
• The crypto market benefits from tighter spreads and deeper collateral pools.
• Points to monitor: the summary of public feedback from the FSA, the scale and timing of the third HKSAR batch issuance, DBGS uptake, distribution of the Franklin fund, and acceptance of collateral exceeding DBS under Project Guardian.

HSBC case studies, the HKMA grant program, and the FSA cold-wallet principle create a direct link between policy and capital flow, forming the basis for effective crypto liquidity.

Thạch Sanh