From Nasdaq.:

The Davos conference, often criticized as tedious and irrelevant, still serves as a platform for debates and dialogue among influential leaders. It was here that a panel discussed the tokenization economy, shedding light on regulatory approaches for blockchain and securities. The discussion delved into complexities of blockchain-based securities transactions and the need for clarity in reporting and identity verification.

The Euroclear approach involves using blockchain technology while repeating transactions on legacy rails to comply with regulators and traditional investors. However, this process raises questions about efficiency and the potential constraints of squeezing new assets into existing structures. As one panelist noted, the philosophy of “same activity, same rules” may limit the transformative potential of blockchain technology for financial markets.

The solution may lie in covering simple tokenized securities with existing rules while allowing for experimentation and innovation within regulatory sandboxes. This approach recognizes the changing nature of markets and paves the way for new rules to accommodate the potential of blockchain-based markets.

The potential of blockchain-based markets extends far beyond efficiency, offering the ability to do things in radically new ways that were not possible before. While new rules will be needed, working within existing ones for now allows for experimentation and progress in the rapidly evolving landscape of financial technology.



Read more: Davos Debate: Should Tokenization Follow the ‘Same Activity, Same Rules’ Approach?