A member of the U.S. Securities and Exchange Commission (SEC) suggests that tokenization is becoming increasingly popular among well-established companies and has the potential to enhance efficiency in global markets and for investors.

Commissioner Mark T. Uyeda, speaking at the SEC’s 30th Annual International Institute for Securities Market Growth and Development, discusses the advantages of tokenization, which involves converting assets like securities into digital tokens, for capital markets.

“Tokenization could offer transactions with enhanced security, transparency, and immutability. It may also eliminate the need for many intermediaries, simplifying the process and lowering transaction costs.”

However, Uyeda emphasizes the importance for regulators to grasp the costs, benefits, and risks associated with this technology. He urges his colleagues to take cues from the U.K. Financial Conduct Authority (FCA), which has already outlined a plan for implementing tokenization.

“While the FCA is still evaluating securities tokenization, it is crucial to recognize the thorough research they are conducting to foster innovation and growth while safeguarding investors. Additionally, other regulators can use the FCA’s research to inform their decisions on tokenization.”

Research from U.S.-based cryptocurrency exchange Coinbase reveals that 86% of Fortune 500 executives see the potential advantages of asset tokenization, with around 35% actively developing tokenization strategies.

The exchange’s survey of Fortune 500 executives shows that more than half are currently engaged in on-chain projects.

“Leading U.S. companies are increasingly involved in on-chain projects. The number of on-chain projects announced by Fortune 100 companies has risen by 39% year-over-year, reaching a new peak in Q1 2024. Survey results indicate that 56% of Fortune 500 executives report their companies are working on on-chain projects.”

From established brands to small businesses, from stablecoins to tokenized assets, notable names in finance are embracing blockchain technology and cryptocurrencies, fostering innovation and paving the way for widespread adoption.

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