Some of Asia’s largest financial firms have published a paper which explores the feasibility of using tokenized securities as a mainstream institutional toolkit. The firms also encouraged regulatory clarity for financial products.
The paper was written by the Asia Securities Industry and Financial Markets Association with other authors including Citigroup Inc, Nomura Holdings Inc, Standard Chartered Plc, PriceWaterhouseCoopers, Linklaters and Norton Rose Fulbright. It proposes that tokenized securities such as stocks or bonds traded on a blockchain platform can become an important tool for financial companies given the right situation. The authors also urge the public sector to issue additional regulations to tap into the full potential of tokenized securities.
According to the report, the blockchain-powered financial product allows for round-the-clock trading, automated compliance, and faster settlement speeds. It states:
“Tokenized securities could represent an innovative new financing and capital raising model that is efficient, scalable and provides liquidity. The link between traditional financial products and instruments and blockchain technology offers stakeholders the reliability of a regulated instrument, combined with the benefits afforded by a blockchain. Because they are generally regulated as securities, they will also bring more trust and support in the crypto market.”
Despite the potential of tokenized securities, institutional investors remain cautious while regulators try to keep pace with the rapidly evolving blockchain industry, which has been dominated by cryptocurrencies.
In the report, the Asia Securities Industry and Financial Markets Association calls on more regulatory clarity throughout the process, from token creation to tax implications.
“Tokenized securities will require innovative solutions that go beyond technology,” the report states. “In some cases, legal reform will be required.”
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