The International Organisation of Securities Commissions (IOSCO) has urged regulators to adopt technology‑neutral, principles‑based oversight to manage risks emerging from linking traditional and crypto markets.
In a report published on Tuesday (11 November), the regulatory group explores how tokenisation is being adopted in different sectors and asked policymakers to consider how best to protect market integrity and investor protection.
Jean-Paul Servais, chair of IOSCO’s board, outlined the importance of agreeing approaches relating to tokenisation in a media statement.
“This report reflects our commitment to understanding emerging technologies and their impact on global capital markets.” he said.
IOSCO’s report highlights the potential of tokenisation to transform financial markets, while noting current adoption is limited, according to Tuang Lee Lim, chair of IOSCO’s Fintech taskforce.
“Tokenisation has the potential to reshape how financial assets are issued, traded, and serviced.” he said.
IOSCO highlighted that numerous capital markets institutions were now running pilots or limited scale implementation.
IOSCO noted the benefits of tokenisation, such as how it can shorten settlement cycles and improve collateral mobility. It noted that many market participants still rely on traditional infrastructure for trading and post-trade processes.
The IOSCO warns that familiar threats such as legal grey areas and cyber vulnerabilities are morphing within DLT frameworks, requiring tailored risk controls.
As tokenisation continues to evolve, regulators and market participants must be informed to unlock its full potential.
