Tokenization and Potential Implications for Financial Markets by OECD

The OECD has recently released its report called “The tokenization and potential implications for financial markets” as as asset tokenization has become one of the most prominent use-cases of distributed ledger technologies (DLTs) in financial markets.

OECD works on financial markets to promote efficient, open, stable and sound market-oriented financial systems, based on high levels of transparency, confidence, and integrity

It has recently released its report – The Tokenization and Potential Implications for Financial markets and includes assets such as securities (e.g. stocks and bonds), commodities (e.g. gold) and other non-financial assets (e.g. real estate).

The report approaches potential cross-cutting implications for financial market practices and participants, market infrastructure and regulators across a large range of financial instruments and asset classes to :

  • examine the benefits of asset tokenization and the challenges to its wider adoption
  • analyse the potential disruptive effect on trading, liquidity, pricing, clearing and settlement
  • highlight the increased importance of a trusted and credible central authority in a tokenized environment (such as a custodian)
  • shed light to the possible necessity for a tokenized form of central bank digital currency or stablecoin for the payment leg of security settlement on DLT-based trading venues
  • discuss the policy implications of tokenization for financial markets

Highlights can be found here

Full report can be found here

Those wishing to have more inputs can also read the latest report of OECD “Regulatory Approaches to the Tokenization of Assets” providing conceptual clarity on asset tokenization and the approaches that policymakers are adopting vis-à-vis this nascent market, without evaluating or assessing any of these approaches.

The report also identifies some key regulatory issues in tokenized assets and markets that policymakers should be aware of and/or which may warrant attention by policymakers.

The annex features a substantial list of policymaking approaches taken by different countries concerning asset tokenization markets and their participants.

Report accessible here

This report is a contribution to the work of the OECD Blockchain Policy Centre and the OECD Going Digital project. A shorter version of this report will become part of the Going Digital Toolkit

Post Author: Wealth Monaco