Why Tokenized Finance is Stalling Despite Regulatory Progress
A report by Hashed Open Research and SCBX reveals that tokenized finance in Southeast Asia is stalling despite significant regulatory and infrastructure progress. While on-chain transaction volume in the Asia-Pacific region surged 68% to $2.36 trillion, institutional adoption remains constrained by unfavorable business models. Banks currently face limited revenue potential from tokenized assets, which often cannibalize existing fee-based services. A critical barrier is the Basel Committee's 1,250% capital charge on certain tokenized assets, which makes holding them prohibitively expensive for financial institutions. Countries like Singapore, Thailand, and Malaysia are actively pursuing local-currency stablecoins and tokenized deposits, yet smaller regional banks lack the capacity to absorb these high capital costs. Meanwhile, the Philippines is exploring stablecoins to optimize $35 billion in annual remittances, and Malaysia’s Khazanah Nasional is developing tokenized sukuk. The report concludes that the future of regional tokenization depends on shifting the economic incentive equation rather than further regulatory reform. Until banks identify profitable use cases that outweigh current capital requirements, growth will likely remain steady but slow.
