SEC commissioner Mark Uyeda acknowledged that asset tokenization, including tokenization of securities, carries potential benefits.
Uyeda said on June 14 that representing asset rights with a digital token on a blockchain can provide “security, transparency, and immutability.”
Furthermore, he said that tokenization removes the need for intermediaries, thereby streamlining transactions and lowering transaction costs.
Uyeda named tokenization as part of broader technology advancements, stating:
“New technologies and innovations might provide further efficiencies to our global markets and investors.”
Uyeda cited a 2020 Depository Trust & Clearing Corporation (DTCC) whitepaper, which indicated dozens of countries have stopped using physical securities certificates as they adopt new technology that dematerializes US securities.
The same report described distributed ledger technology (DLT) and digital and tokenized securities as “cutting-edge fintech innovations.”
FCA reviewing tokenization
Uyeda also acknowledged that the UK FCA’s Asset Management Task Force began to review the tokenization of FCA-authorized funds starting in November 2023. He said:
“It is important to highlight the depth of research [the FCA is] undertaking to allow for innovation and growth while still protecting investors from harm.”
He added that the FCA’s review could inform other regulators’ steps and urged regulators to address tokenization’s costs, benefits, and risks.
Uyeda said his statements are his individual views, not those of his fellow SEC commissioners. As such, they do not represent the SEC’s stance on securities tokenization.
DTCC touts benefits
Elsewhere, DTCC Digital Assets global head and managing director Nadine Chakar described the benefits of tokenization before Congress on June 5. She said that tokenization has the potential to streamline transactions, reduce costs, and broaden investor access across financial markets.
However, despite the benefits, Chakar acknowledged challenges in integrating DLT into existing systems, citing the need for industry-wide coordination, standardization, and robust regulatory frameworks. She urged lawmakers to align tokenization regulations with existing financial frameworks, advocating for the principle of “same activity, same risk, same regulation.”
Additionally, she called for further studies to ensure the legal enforceability of tokenized assets and operational resiliency under insolvency regimes.
Similarly, VanEck CEO Jan van Eck described liquidity and regulation as potential obstacles to the advancement of tokenization in the financial sector.
Meanwhile, the Bank for International Settlements recently announced that tokenization and central bank digital currencies (CBDCs) were a key area of focus for the regulator during 2024.
Global consulting firm Roland Berger said in October 2023 that the tokenization market, worth $300 billion, could reach $10 trillion by 2030.
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