A member of the U.S. Securities and Exchange Commission (SEC) believes that tokenization is becoming increasingly popular among major companies and has the potential to enhance efficiency in global markets and for investors.
Commissioner Mark T. Uyeda shared his insights on tokenization during the SEC’s 30th Annual International Institute for Securities Market Growth and Development. He highlighted how tokenization, which involves converting assets like securities into digital tokens, can improve capital markets.
“Tokenization offers transactions a higher level of security, transparency, and immutability. It can also reduce the need for many intermediaries, making the process more streamlined and lowering transaction costs.”
However, Uyeda emphasized the importance for regulators to fully understand the costs, benefits, and risks associated with this technology. He encouraged his colleagues to take cues from the U.K. Financial Conduct Authority (FCA), which has already laid out a blueprint for implementing tokenization.
“While the FCA is still reviewing securities tokenization, it is commendable to see the thorough research they are conducting to foster innovation and growth while safeguarding investors. Other regulators can learn from the FCA’s approach when considering their own steps towards tokenization.”
Research conducted by U.S.-based crypto exchange Coinbase indicates that 86% of Fortune 500 executives recognize the potential advantages of asset tokenization, with around 35% actively developing tokenization strategies.
The survey of Fortune 500 executives revealed that a majority of them are currently engaged in on-chain projects.
“Major U.S. companies are increasingly involved in on-chain projects. The number of on-chain projects announced by Fortune 100 companies has surged by 39% year-over-year, reaching a peak in Q1 2024. A significant portion of Fortune 500 executives stated that their companies are working on on-chain initiatives.”
From well-established brands to small businesses, from stablecoins to tokenized assets, various players in the financial industry are embracing blockchain technology and cryptocurrencies. This trend is driving innovation and creating pathways for broader adoption.
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