Yesterday, CI reported that multiple regulators around the world had announced a partnership to collaborate on digital asset, or crypto asset, innovation. The goal is to enable innovation to thrive while protecting investors. The agencies participating in the partnership include the UK Financial Conduct Authority (FCA), Switzerland’s Financial Market Supervisory Authority (FINMA), the Financial Services Agency of Japan (FSA) and the Monetary Authority of Singapore (MAS). Each of these jurisdictions have been willing to tackle changes in financial services, understanding that while challenging, improvements can be made with digital technology.
Today, CI has received a comment from Todd McDonald, co-founder and Chief Strategy Officer at asset tokenization firm R3. A permissioned blockchain provider (Corda), R3 has services enterprises and institutions that require high performance transactions. Recently, R3 partnered in a bond offering in Europe as it pushes forward with digital securities, which most see as the future of assets.
McDonald said the financial world is rocketing towards one filled with digital assets:
“If the correct tokenization solutions and frameworks are in place – such as control location services, custody, and control frameworks, and most crucially, interoperability – the potential is huge. This will all depend on the evolution of industry standards,” said McDonald. “Regulatory sandboxes, such as the EU’s DLT Pilot Regime or the UK’s FMI Sandbox, also offer certainty and encourage experimentation. They support new technologies that enable tokenization, contributing to enduring industry standards.”
He added that open collaboration among stakeholders, both public and private, is key to unlocking the full potential of this “transformative” tech.
“By working together and adopting comprehensive frameworks, the finance industry can harness the benefits of tokenization and create a more inclusive and efficient financial ecosystem,” McDonald said.
As mentioned yesterday, there is a notable exception in the list of securities regulators – the US Securities and Exchange Commission (SEC). Under the leadership of Chair Gary Gensler, the SEC has taken a more hostile approach towards digital assets, pushing back on innovation and change while reverting to laws written decades ago – prior to the emergence of the internet.
Certain members of Congress have been attempting to enable digital asset innovation while protecting consumers but this has been stymied due to other priorities and a reactionary Senate that has been unwilling to deal with the new technology with the exception of consumer protection at all cost.