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

Commissioner Mark T. Uyeda discussed the benefits of tokenization during the SEC’s 30th Annual International Institute for Securities Market Growth and Development. Tokenization involves converting assets, such as securities holdings, into digital tokens, which can offer higher security, transparency, and immutability for transactions. It can also eliminate the need for many intermediaries, simplifying the process and reducing costs.

However, Uyeda emphasized the importance of regulators understanding the costs, benefits, and risks associated with this technology. He encouraged his colleagues to learn from the U.K. Financial Conduct Authority (FCA), which has already developed a blueprint for implementing tokenization. By reviewing the FCA’s research, other regulators can consider the necessary steps for tokenization.

Research conducted by the U.S.-based crypto exchange Coinbase revealed that 86% of Fortune 500 executives recognize the potential advantages of asset tokenization, with about 35% actively working on tokenization plans. A survey of Fortune 500 executives also found that over half of them are engaged in on-chain projects.

Major American companies are increasingly involved in on-chain projects, with announcements from Fortune 100 companies growing by 39% year-over-year and reaching a peak in Q1 2024. This trend indicates that from established brands to small businesses, the finance industry is embracing blockchain technology and cryptocurrencies, driving innovation and paving the way for widespread adoption.

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