Tokenisation and the Regulatory Arbitrage Window

The State of Play

Tokenisation — the representation of traditional financial assets (equities, bonds, real estate, commodities, fund shares) as digital tokens on distributed ledger infrastructure — has moved from proof-of-concept to operational deployment. The question is no longer whether tokenisation will restructure financial market infrastructure. It is where it will happen first, under what regulatory framework, and who will capture the value.

The numbers have reached a scale that demands attention. As of January 2026, the total value of tokenised real-world assets (excluding stablecoins) exceeds $15 billion, up from approximately $3 billion in early 2024. BlackRock's BUIDL tokenised money market fund holds over $600 million. Franklin Templeton's BENJI fund exceeds $400 million. JPMorgan's Onyx platform has processed over $1.5 trillion in tokenised repo transactions since inception.

These are not crypto-native experiments. They are traditional financial institutions deploying blockchain infrastructure for conventional financial products, driven by concrete operational advantages: 24/7 settlement, fractional ownership, programmable compliance, and elimination of reconciliation overhead across multi-party transactions.

The US Regulatory Ambiguity

The United States remains the world's largest capital market and the natural home for tokenised securities innovation. But the regulatory environment has created a paradox: US institutions are building tokenisation infrastructure, but the most permissive operating environments are elsewhere.

The SEC under the second Trump administration has signalled a more constructive approach to digital assets than its predecessor. The Crypto Task Force established in January 2025 produced interim guidance in Q3 2025 that acknowledged the distinction between tokenised securities (regulated under existing securities law) and utility tokens. Commissioner Hester Peirce's "Safe Harbor 2.0" proposal, if adopted, would provide a three-year grace period for token projects to achieve decentralisation before being required to register as securities.

However, signalling is not regulation. As of early 2026, no comprehensive legislative framework for digital asset securities has been enacted. The FIT21 Act (Financial Innovation and Technology for the 21st Century Act) passed the House in May 2024 but stalled in the Senate. Its successor bill, introduced in November 2025, remains in committee. The result is that US-based tokenisation projects operate in a regulatory grey zone — not explicitly prohibited, but without the legal certainty required for institutional adoption at scale.

The Jurisdiction Race

While the US deliberates, other jurisdictions have moved to establish clear regulatory frameworks designed to attract tokenisation infrastructure and capital.

Switzerland

Switzerland's DLT Act (Distributed Ledger Technology Act), fully in force since August 2021, provides the most mature legal framework for tokenised securities globally. Key provisions include:

• Legal recognition of "ledger-based securities" (Registerwertrechte) as a new category of securities under Swiss law
• A dedicated DLT trading facility licence, enabling regulated trading of tokenised assets outside traditional exchange infrastructure
• Clear custody rules for digital assets held by banks and securities dealers
• Interoperability with existing FINMA regulatory framework

SDX (SIX Digital Exchange), operated by the Swiss stock exchange group, is now processing tokenised bond issuances from major institutions including the World Bank, UBS, and Credit Suisse (now part of UBS). The Canton of Basel-Stadt issued a CHF 100 million tokenised bond in 2025 — the first government bond natively issued on blockchain infrastructure in a major economy.

Singapore

The Monetary Authority of Singapore (MAS) has pursued a "regulated sandbox" approach through Project Guardian, a collaborative initiative with major banks (DBS, JPMorgan, Standard Chartered) and asset managers to develop institutional-grade tokenisation infrastructure. Key outcomes include:

• Successful pilot issuances of tokenised bonds, FX, and fund shares on permissioned DLT networks
• A regulatory framework for "Digital Payment Tokens" under the Payment Services Act, with clear licensing requirements
• MAS's "Orchid Blueprint" for a purpose-bound money (PBM) infrastructure using tokenised deposits

Singapore's approach prioritises institutional participation and interoperability with traditional financial infrastructure, making it the preferred hub for Asian tokenisation activity.

United Arab Emirates

The UAE, particularly through Abu Dhabi's ADGM (Abu Dhabi Global Market) and Dubai's DIFC (Dubai International Financial Centre), has established regulatory frameworks explicitly designed to attract digital asset businesses. The Virtual Asset Regulatory Authority (VARA) in Dubai provides comprehensive licensing for tokenisation platforms, custodians, and exchanges.

The UAE's advantage is speed. Licensing timelines that take 12–18 months in other jurisdictions can be completed in 3–6 months in ADGM or VARA, with dedicated support teams for tokenisation projects. This has attracted a concentration of tokenisation infrastructure companies, including Securitize, Fireblocks, and Chainalysis, which have established regional headquarters in the UAE.

European Union (MiCA)

The Markets in Crypto-Assets Regulation (MiCA), fully effective since December 2024, provides the EU's first comprehensive framework for crypto-assets including utility tokens, stablecoins, and — through interaction with existing MiFID II provisions — tokenised securities. MiCA's significance lies in its passporting mechanism: a licence obtained in any EU member state is valid across all 27 members, creating a single market for regulated tokenisation activity.

In practice, Ireland, Luxembourg, and France are emerging as the preferred MiCA licensing jurisdictions for tokenisation platforms, leveraging their existing strengths in fund administration and securities services.

The Arbitrage Dynamics

The regulatory divergence creates arbitrage opportunities across several dimensions:

Issuance arbitrage. Organisations that want to issue tokenised securities today face a choice: navigate US regulatory ambiguity with associated legal costs and uncertainty, or issue in a jurisdiction with an established framework. For issuances under $500 million — the sweet spot for tokenisation's fractional ownership advantages — the cost-benefit analysis increasingly favours non-US jurisdictions.

Infrastructure arbitrage. Tokenisation platforms, custodians, and market-making operations are making location decisions based on regulatory clarity. The talent and capital that establishes in Switzerland, Singapore, or the UAE during this window will be difficult to repatriate to the US even after regulatory clarity eventually arrives.

Talent arbitrage. Legal, compliance, and engineering talent specialising in tokenised securities is gravitating toward jurisdictions where they can actually build and deploy. The US is producing the talent; other jurisdictions are employing it.

Regulatory clarity is not a feature of innovation — it is the prerequisite for institutional adoption. The jurisdictions that understand this first will capture the infrastructure layer of tokenised finance. Swiss National Bank, Financial Stability Report 2025

What Closes the Window

The arbitrage window is not permanent. Several developments could narrow or close it:

• US legislative action. Passage of comprehensive digital asset legislation would provide the regulatory certainty that US markets need. If this occurs before 2028, much of the tokenisation infrastructure currently being built offshore could migrate back to the US.
• SEC no-action letters. Even without legislation, SEC guidance through no-action letters for specific tokenisation use cases (tokenised money market funds, tokenised treasuries) would significantly reduce regulatory risk for US-based issuers.
• Interoperability standards. If tokenised securities issued in different jurisdictions cannot interact seamlessly — cross-border settlement, unified custody, consistent compliance — the fragmentation itself becomes a barrier that favours consolidation in the largest market (the US).
• A major failure. A significant fraud, hack, or operational failure involving tokenised securities in any jurisdiction would trigger regulatory tightening globally, potentially closing the permissive window in smaller jurisdictions while accelerating restrictive regulation in the US.

Implications

For financial institutions: The optimal strategy is to establish tokenisation capability in a clear-regulation jurisdiction now, while maintaining US market access for eventual onshore deployment. Dual-jurisdiction structures — Swiss or Singapore issuance with US distribution under Reg S/Reg D exemptions — are becoming the standard architecture.

For technology providers: Tokenisation infrastructure companies should prioritise multi-jurisdictional compliance. The platform that can support issuance and trading under Swiss DLT Act, MiCA, MAS guidelines, and eventual US regulation simultaneously will capture the infrastructure layer.

For policymakers: The US is at risk of losing its position as the primary jurisdiction for financial innovation in securities markets — not because of hostile regulation, but because of regulatory absence. Each quarter of delay compounds the advantage of jurisdictions that have already acted.

This analysis draws on SEC filings and guidance, MiCA regulatory text, FINMA publications, MAS Project Guardian documentation, industry data from rwa.xyz and DefiLlama, and public statements from financial institution executives. All assessments reflect the analytical judgement of PureTensor // Intel.