SEC commissioner Mark Uyeda acknowledged the potential benefits of asset tokenization, including securities tokenization, on June 14. He highlighted that using digital tokens on a blockchain can enhance security, transparency, and immutability.

Uyeda noted that tokenization eliminates intermediaries, streamlining transactions and reducing costs. He framed tokenization as part of broader technological advancements, stating that new technologies could bring further efficiencies to global markets and investors.

He referred to a 2020 Depository Trust & Clearing Corporation (DTCC) whitepaper, which noted that many countries have moved away from physical securities certificates in favor of dematerializing US securities through new technology. The whitepaper described distributed ledger technology (DLT) and digital and tokenized securities as cutting-edge fintech innovations.

Regarding the UK's Financial Conduct Authority (FCA), Uyeda mentioned that the FCA’s Asset Management Task Force started reviewing the tokenization of FCA-authorized funds in November 2023. He emphasized the importance of this research in fostering innovation while protecting investors and suggested that the FCA's findings could guide other regulators. He stressed the need for regulators to consider the costs, benefits, and risks of tokenization.

Uyeda clarified that his views are personal and do not reflect the positions of the SEC or its commissioners.

Elsewhere, Nadine Chakar, DTCC Digital Assets global head and managing director, testified before Congress on June 5, detailing the benefits of tokenization in streamlining transactions, lowering costs, and expanding investor access. However, she noted challenges in integrating DLT into existing systems, calling for industry-wide coordination, standardization, and robust regulatory frameworks. She urged alignment of tokenization regulations with existing financial frameworks, emphasizing the principle of “same activity, same risk, same regulation.” Chakar also advocated for studies to ensure the legal enforceability and operational resilience of tokenized assets.

VanEck CEO Jan van Eck also cited liquidity and regulatory challenges as obstacles to the advancement of tokenization in finance.

The Bank for International Settlements recently identified tokenization and central bank digital currencies (CBDCs) as key areas of focus for 2024. Global consulting firm Roland Berger predicted that the tokenization market, valued at $300 billion in 2023, could grow to $10 trillion by 2030.