A US Securities and Exchange Commission (SEC) commissioner says tokenization is gaining traction among blue-chip companies and could provide further efficiencies for global markets and investors.
During the SEC’s 30th Annual International Institute for Securities Market Growth and Development, Commissioner Mark T. Uyeda explains how tokenization—the conversion of assets such as securities holdings into digital tokens—can capital markets benefit.
“Tokenization can provide transactions with a higher level of security, transparency and immutability. It can also remove the need for most intermediaries, streamlining the process and reducing transaction costs.”
But Uyeda says regulators need to understand the costs, benefits and risks of the technology, urging his colleagues to learn from the UK’s Financial Conduct Authority (FCA), which has already published a plan to implement tokenization.
“As the FCA continues its review of securities tokenisation, it is important to highlight the depth of research they are undertaking to enable innovation and growth, while still protecting investors from harm. Importantly, other regulators may review the FCA’s inquiry to consider what steps, if any, they can take in relation to tokenisation.”
Research from US-based crypto exchange Coinbase shows that 86% of Fortune 500 executives see the potential benefits of asset tokenization and about 35% are drawing up tokenization plans.
According to the crypto exchange, a survey of Fortune 500 executives found that over half of them are currently working on on-chain projects.
“America’s top public companies are busier than ever on the chain. On-chain projects announced by Fortune 100 companies grew 39% year-over-year and hit a record high in the first quarter of 2024. A survey of Fortune 500 executives reveals that 56% say their companies are work on chain projects.
From the largest legacy brands to small businesses, stablecoins to tokenized Treasuries, trusted names and products in finance are embracing blockchain and crypto technology, driving innovation and providing advanced platforms for widespread adoption.”
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