SEC commissioner Mark Uyeda acknowledged that asset tokenization, together with tokenization of securities, carries potential advantages.
Uyeda stated on June 14 that representing asset rights with a digital token on a blockchain can present “safety, transparency, and immutability.”
Moreover, he stated 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 world 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 Activity Drive started to evaluate the tokenization of FCA-authorized funds beginning in November 2023. He stated:
“It is very important 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 evaluate may inform different regulators’ steps and urged regulators to handle tokenization’s prices, advantages, and dangers.
Uyeda stated his statements are his particular person views, not these of his fellow SEC commissioners. As such, they don’t signify the SEC’s stance on securities tokenization.
DTCC touts advantages
Elsewhere, DTCC Digital Property world head and managing director Nadine Chakar described the advantages of tokenization earlier than Congress on June 5. She stated that tokenization has the potential to streamline transactions, cut back prices, and broaden investor entry throughout monetary markets.
Nonetheless, regardless of the advantages, Chakar acknowledged challenges in integrating DLT into current methods, 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 “identical exercise, identical danger, identical regulation.”
Moreover, she known 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 just lately introduced that tokenization and central financial institution digital currencies (CBDCs) have been a key space of focus for the regulator throughout 2024.
International consulting agency Roland Berger stated in October 2023 that the tokenization market, price $300 billion, may attain $10 trillion by 2030.