Asean’s financial market is fragmented. Tokenisation could fix that

TOKENISATION turns ownership of an asset – a bond, a share, even a building – into a digital record that can be held and transferred electronically, with the asset’s rules built into the record.

The sector is growing rapidly. Industry trackers value tokenised assets, excluding stablecoins, at more than US$30 billion by mid-2026, up from about US$6 billion at the start of 2025.

Scale, however, remains elusive, the Monetary Authority of Singapore (MAS) has acknowledged. In 2024, MAS deputy managing director Leong Sing Chiong said that no one has really succeeded in achieving scale, because projects sit on separate networks that cannot talk to one another, driving up costs and spreading buyers and sellers thin.

The obstacle is fragmentation, not technology. This is Asean’s problem. Its combined output of more than US$4 trillion would rank it as the world’s fourth or fifth-largest economy.

Yet, each market has its own rules and systems for settling trades – the point at which cash and assets change hands. Cross-border investments must therefore pass through several layers of middlemen, diminishing efficiency. A shared digital settlement system could help address this problem.

The region has tried a shortcut before. The Asean Trading Link, launched in 2012, connected the Singapore, Malaysia and Thai exchanges through a single gateway, but trading stayed thin and it closed in October 2017.

It joined the markets at the point of trading while each still settled trades in its own way, so the friction simply reappeared afterwards. Shared settlement is the missing piece.

Settlement first

Progress has gone furthest here. The goal is for cash and assets to change hands instantly, removing the risk that one side pays while the other fails to deliver.

MAS’ SGD Testnet is one step towards that. The shared ledger infrastructure lets banks such as DBS, OCBC, Standard Chartered and UOB settle in digital central bank money. In November 2025, DBS and Kinexys, JPMorgan Chase’s blockchain unit, agreed to link their tokenised-deposit networks.

Bonds come first, helped by Singapore’s Global-Asia Digital Bond Grant Scheme, which aims to encourage market adoption of digital bonds. It meets 30 per cent of eligible issuance costs, up to S$450,000 per issue.

But grants only pay for a first issue; common standards decide whether there is a second. MAS’ Project Guardian frameworks, published in November 2024, described tokenised bonds and funds in a common way, so products on different platforms can be compared and traded.

Equities will take a different route, because what matters is who issues the token. In March 2026, Nasdaq proposed writing tokens into the company’s official share register, so the token is legally the share.

Most of the roughly US$2 billion of tokenised stocks outstanding are instead issued by third parties. As the US SEC noted in January 2026, these may give investors only an indirect interest in shares, or merely a claim against the platform.

More work, then, is needed for mass adoption of tokenised stocks.

What code cannot do

Institutional trust will be earned through controls, not enthusiasm.

Firms will need independent checks on smart contracts – the software that runs tokenised assets – and plans for new failures, such as a stolen digital key, a coding error or a linked network going down. Rules on safeguarding client assets still apply, adapted to these risks.

The law is catching up. On Sep 1, 2026, MAS proposed legislation to bring its rules for stablecoins – digital tokens pegged to a single currency – into force, requiring issuers to redeem coins at face value and safeguard customer money.

By banning interest, MAS signals that stablecoins are payment tools, not deposits in disguise. Questions remain, such as when ownership legally passes.

Contracts must provide for what the code cannot: who holds the asset, which court decides in a dispute, and which record prevails when the ledger and the paperwork disagree.

Joining up the region

Regional alignment is the harder part, and the obstacles are institutional rather than technical.

Project Nexus, developed by the Bank for International Settlements, offers a model: it links instant payment systems such as Singapore’s PayNow, Malaysia’s DuitNow and Thailand’s PromptPay through a single gateway.

Tokenised securities need something similar. MAS’ new Future of Finance Institute could coordinate that, provided its remit runs beyond research.

What turns a pilot into a business case is measurement: settlement times, error rates and cost per client are what persuade boards and regulators.

For institutions, the practical steps are clear: choose networks for what they connect to, adopt the Project Guardian standards, and settle questions of ownership and the governing law before the first trade, not after the first dispute.

Tokenisation can make Asean assets cheaper to buy, faster to settle, easier to verify and open to smaller investors. In a region that raises far less capital than its economy suggests it could, the gains could be large. Fragmentation is the last thing standing between the pilots and that prize.

Both writers are from RHTLaw Asia. Tan Chong Huat is senior partner and head, digital assets and technology, and is also chairman of SDAX Exchange. Ch’ng Li-Ling is deputy head, digital assets and technology.