Tokenization is creating new dangers for the financial system, the global securities regulator IOSCO warned on Tuesday.
Key concerns include “spill-over effects” from the volatile crypto market and heightened counterparty risk from the firms that issue the tokens.
The report states that while tokenization revives interest among crypto enthusiasts and is being adopted by firms like Nasdaq, its structure poses problems. Investors may be unclear on what they actually own, and the underlying technology introduces fresh vulnerabilities.
This warning from the body representing the world’s major securities regulators adds significant weight to the ongoing debate on the merits of tokenizing mainstream assets.
