From real estate to deposits and bonds, the tokenization of real-world assets ( RWA ) is gaining momentum as more financial regulators and market participants eagerly participate in its development. As of mid-2025, an estimated US$24 billion worth of tokenized assets have been put on-chain, according to blockchain oracle provider Redstone and risk modelling firm Gauntlet, growing from only US$5 billion in 2022. One area where RWA tokenization is taking shape is within the bond market, where there is growing institutional interest in tokenized bonds.

Similar to other tokenized assets, tokenized bonds or digital bonds are digital versions of traditional debt instruments issued on blockchain platforms. It is positioned to significantly improve the entire debt capital markets process by allowing for fractional ownership of bonds, essentially lowering the entry barrier for investors and thereby enhancing the liquidity of the overall market. Moreover, tokenized bonds can reduce settlement times and improve the overall transparency in the market.

In Asia, governments, financial institutions, and corporates have undertaken several milestone transactions to harness the opportunities around tokenized bonds. The Hong Kong government, for example, has issued two tokenized bonds, with the latest in 2024 marking the world’s first multi-currency digital bond offering. Other organizations,  including DBS, OCBC, HSBC, Bank of Communications, and the National University of Singapore, have utilized blockchain technology within their respective bond issuances.

The region has indeed had an early start in the adoption of tokenized bonds, with a Hong Kong Monetary Authority ( HKMA ) report revealing that Asian-based issuers had issued about 70% of tokenized bonds globally between 2018 to March 2023.

Wider policy support

However, more needs to be done to encourage the further adoption of tokenized bonds. An area requiring attention is the need for wider policy and regulatory support. In the financial hubs of Hong Kong and Singapore, grant schemes have been launched to help potential issuers overcome the initial barriers of adopting the new technology. Singapore’s Global-Asia Digital Bond Grant Scheme, for instance, covers 30% of eligible expenses and allows for a maximum grant of US$330,000 per issuance.

Another critical area is upgrading market infrastructure and enabling interoperability across different distributed ledger technology ( DLT ) platforms. The current trend of institutions building siloed DLT platforms such as private chains will only lead to market fragmentation. One key goal must be to establish standards that allow the trading and settlement of bonds on different DLT platforms.

One advantage of tokenized bonds, that of having a liquid secondary market, should lead to widespread adoption by institutional investors ( asset managers, insurers ) and retail investors, but this must be supported by clear custody rules and 24/7 trading infrastructure.

The most significant technological hurdle is the settlement process. To achieve true atomic settlement, e.g., instantaneous exchange of bond for cash, there must be a digital form of money on the same DLT network. Central bank digital currencies such as China’s e-CNY are seen as the ideal solution, providing a risk-free, central bank-backed tokenized currency for settlement.

Finally, bond tokenization pilot programmes should demonstrate to both issuers and investors the value of tokenized bonds over traditional bonds. For example, the HKMA study found that tokenized bonds saw an average reduction of 0.22% in underwriting fees and 0.79% in borrowing costs. While settlement times have the potential to reduce from days to minutes or seconds, scaling this speed is critical for reducing counterparty and liquidity risks for institutions.

Investors also benefit from improved access, potentially higher liquidity, and novel investment opportunities via tokenized bonds. For example, OCBC offered digital bonds to investors with denominations of S$1,000, compared to the minimum of S$250,000 for a typical corporate bond.

Though hurdles remain in the region, globally, RWA tokenization has the momentum to increase exponentially; a report from data company Security Token Market forecastes a US$30 trillion market by 2030, led by the tokenization of stocks, real estate bonds, and gold.