Institutional Tokenization 3.0: Break Silos
October 2024 Institutional Tokenization 3.0: Break Silos Since Tokeny started building tokenization solutions in 2017, we have seen financial institutions exploring tokenization of assets in…
US and EU Regulators Move to Embrace Blockchain Technology
This month, we are traveling to Miami, New York, and San Francisco for business meetings and events. Our partner Inveniam organized an impressive conference where mayors from Miami and New York spoke and embraced blockchain technology.
Our CEO Luc and CCO Daniel were honored to speak on three panels to share our knowledge and experience on asset tokenization. In conversations with attendees and speakers, the topic of regulation kept coming up in light of recent regulatory developments in the U.S. and EU:
- US’s Digital Asset EO: on March 9, the White House signed an executive order (EO) on digital assets, representing a turning point in the acceptance and recognition of digital assets by the government.
- EU’s MiCA: on March 14, the European Parliament’s ECON Committee passed Marketplace for Crypto Assets (MiCA) draft legislation, refusing to ban the Proof of Work (PoW) mechanism, which was a relief for all European players.
What are our thoughts on the current state of regulation in Europe and the US regarding tokenization?
- Issuance: The EU has progressed well on recognizing that blockchain-based financial instruments as securities, especially in Luxembourg, where we are based, providing the regulatory clarity for native issuance of assets on blockchain.
- Liquidity: The US regulators FINRA and SEC, have approved several ATS for tokenized securities (e.g. Rialto, Oasis Pro Markets, Texture Capital, …), giving participants faster access to liquidity, whereas the EU has a complicated CSD regulation that makes access to liquidity expensive and slower. Consequently, our Billboard solution was designed to provide European players with a license-free liquidity solution.
- Cash legs: Dollar stablecoins are dominating the market, while Euro stablecoins were rarely issued and used due to an unclear regulation. The new MiCA regulation clarifies the different types of authorized stablecoins.
Regulation is an important factor in the widespread adoption of innovation, however it will take a long road until the bill is passed and implemented. Our role is to protect our partners and clients through a compliance infrastructure that allows them to remain agile regardless of the jurisdictions and regulatory changes.
