By most metrics, tokenized finance is booming worldwide.
However, our new tokenized economies have a structural flaw. We’ve digitized assets, such as bonds and securities, but still haven’t tokenized the actual money that changes hands during these transactions.
When a tokenized bond changes hands in Hong Kong or New York today, the security settles on a blockchain in seconds, but the payment still takes days to crawl through legacy banking rails.
We’ve only built half of the tokenization engine. The other half—regulated, local-currency settlement instruments that let a tokenized asset and its payment move on the same blockchain rails—still needs to be developed.
And the countries that move first will have a decisive advantage because infrastructure decisions have peculiar economics: The longer you wait to make an infrastructure decision, the more costly the decision becomes to implement. SWIFT's message formats, the dollar's role in trade invoicing, or the T+2 settlement convention all began as a simple, inexpensive choice among several institutions. Now they’ve hardened into norms that everyone must accommodate.
The default is by far dollar stablecoins, which make up 99.5 percent of the global stablecoin float. A dollar token, however, can't pay for a yen-denominated fund or an HKD bond without bolting currency risk onto every transaction. If nothing changes, the entire tokenized world ends up settling in someone else's money, and that's why the most important experiment in finance right now is happening in Asia.
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Local Markets Need Local Money
Asia's bet on tokenization is paying off. Hong Kong's government has issued more than $2 billion in tokenized green and infrastructure bonds and now counts 13 publicly offered tokenized products holding roughly US $1.4 billion—a seven-fold increase in only a year. Japan's securities clearing house is trialing blockchain-based collateral using government bonds with Mizuho and Nomura, and Korea has set an early-2027 target for a fully tokenized securities market.
The component Asia is missing is a tokenized payment instrument: a regulated token, denominated in Hong Kong dollars, yen or won, and redeemable at par, that sits on the same blockchain ledger as the assets it settles.
That distinction is crucial because a transaction is only as fast as its slowest leg. If a payment still needs to clear through correspondent banks and slow, legacy payment rails, the theoretical gains of tokenization (freed collateral, eliminated counterparty exposure and programmable transactions) completely evaporate. Trades don’t actually settle faster.
Dollar stablecoins have grown to fill this role in many cases, but they can’t be used for local payment without adding currency risk to every transaction.
Hong Kong's Stablecoins Ordinance, in force since August 2025, is a strong first step that sets the region up for success. Hong Kong has imposed standards on stablecoin issuers that are deliberately high: Issuers must hold HK $25 million in minimum capital, hold fully back reserves with high-quality liquid assets, and offer redemption at par. Licenses have been reserved for only a handful of institutions. Thirty-six applicants sought licenses in the first round; the HKMA granted only two: HSBC and Anchorpoint. Both issuers are established and trusted financial institutions.
Some read that 5.6 percent approval rate as timidity. But really, it’s a strategy to earn trust, which is crucial for a token to earn adoption. To a compliance officer, all of these things—a scarcity of licenses, severe reserve requirements and issuance limited to trusted established brands—connote trust. They make it easier for a risk-averse institution to say “yes” to a tokenized local currency.
Building the Global Blueprint
Asia's tokenized markets are currently at a precipice. The simple decisions institutions make now will become future norms. A local currency settlement instrument introduced today will get woven into the foundation of tokenized markets, becoming a part of the global blueprint for tokenized finance.
These instruments will start small and stay specialized for years. A licensed HKD token settling insurance premiums and a slice of the tokenized bond market is a success at this stage, even at modest volume. The important thing is to continue expanding integrations. Every custodian that supports the token, fund administrator that accepts it, and treasury system that connects to it becomes permanent plumbing. Payment infrastructure grows by accretion—each connection makes the next one cheaper.
So looking at market-cap as a metric for success can be misleading. Dollar stablecoins will dominate headline volume for the foreseeable future, and that's fine. The job of a local-currency token in 2026 is to be integrated everywhere, even before demand exists.
Hong Kong's tokenized bond market is growing 7x/year, and Korea's full tokenized securities market arrives in 2027. When those markets reach institutional scale, the settlement currency they run on will be whichever one is already wired in—hopefully a local, tokenized currency.
Tim Sun is a senior researcher at HashKey Group, where he analyzes developments across digital asset markets, market structure, regulation and institutional adoption.