IOSCO: Tokenization’s Promise for Finance Comes with Novel Risks That Must Be Managed
The global securities watchdog IOSCO has framed tokenization as a dual-edged sword. In a new report, the body acknowledged the technology’s “potential to reshape how financial assets are issued, traded, and serviced,” but immediately cautioned that this innovation brings a set of novel risks that must be addressed.
While many risks fall under existing regulatory frameworks, IOSCO pointed to new vulnerabilities stemming from the technology itself.
These include legal ambiguity for investors, reliance on third-party token issuers, and “potential spill-over effects” from the crypto asset market. The findings highlight the deepening split in finance, where some institutions charge ahead while others, and now regulators, urge a more measured approach.
