SEC commissioner Mark Uyeda acknowledged that asset tokenization, together with tokenization of securities, carries potential advantages.
Uyeda mentioned on June 14 that representing asset rights with a digital token on a blockchain can present “safety, transparency, and immutability.”
Moreover, he mentioned that tokenization removes the necessity for intermediaries, thereby streamlining transactions and decreasing transaction prices.
Uyeda named tokenization as a part of broader know-how developments, stating:
“New applied sciences and improvements would possibly present additional efficiencies to our international markets and traders.”
Uyeda cited a 2020 Depository Belief & Clearing Company (DTCC) whitepaper, which indicated dozens of nations have stopped utilizing bodily securities certificates as they undertake new know-how that dematerializes US securities.
The identical report described distributed ledger know-how (DLT) and digital and tokenized securities as “cutting-edge fintech improvements.”
FCA reviewing tokenization
Uyeda additionally acknowledged that the UK FCA’s Asset Administration Job Pressure started to evaluation the tokenization of FCA-authorized funds beginning in November 2023. He mentioned:
“You will need to spotlight the depth of analysis [the FCA is] endeavor to permit for innovation and progress whereas nonetheless defending traders from hurt.”
He added that the FCA’s evaluation might inform different regulators’ steps and urged regulators to deal with tokenization’s prices, advantages, and dangers.
Uyeda mentioned his statements are his particular person views, not these of his fellow SEC commissioners. As such, they don’t symbolize the SEC’s stance on securities tokenization.
DTCC touts advantages
Elsewhere, DTCC Digital Belongings international head and managing director Nadine Chakar described the advantages of tokenization earlier than Congress on June 5. She mentioned that tokenization has the potential to streamline transactions, cut back prices, and broaden investor entry throughout monetary markets.
Nevertheless, regardless of the advantages, Chakar acknowledged challenges in integrating DLT into current techniques, citing the necessity for industry-wide coordination, standardization, and sturdy regulatory frameworks. She urged lawmakers to align tokenization rules with current monetary frameworks, advocating for the precept of “similar exercise, similar danger, similar regulation.”
Moreover, she referred to as for additional research to make sure the authorized enforceability of tokenized belongings and operational resiliency beneath insolvency regimes.
Equally, VanEck CEO Jan van Eck described liquidity and regulation as potential obstacles to the development of tokenization within the monetary sector.
In the meantime, the Financial institution for Worldwide Settlements not too long ago introduced that tokenization and central financial institution digital currencies (CBDCs) have been a key space of focus for the regulator throughout 2024.
World consulting agency Roland Berger mentioned in October 2023 that the tokenization market, price $300 billion, might attain $10 trillion by 2030.
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