From Nasdaq:

In February, the Office of the Comptroller of the Currency plans to implement new rules on operational resilience for large banks with critical operations. These banks are in the process of tokenizing over $108 trillion in assets using permissioned networks, raising concerns about cybersecurity vulnerabilities in the global financial system.

Regulators are recognizing the trend of tokenization. The Fed, Hong Kong’s Securities & Finance Commission, and the OCC have all issued guidance or held symposiums on tokenization. Encouraging the use of permissioned networks over permissionless blockchains may lead to cybersecurity attacks as traditional financial institutions embrace crypto.

Hyun Song Shin of the Bank for International Settlements presented a vision for a unified ledger to improve settlement and programmability without blockchains. Meanwhile, Michael Hsu questioned the need for blockchains in tokenization, highlighting the potential financial stability risks of different scenarios. The decentralized nature of blockchain technology provides operational resiliency that centralized systems lack.

Cryptocurrency hacks often target centralized protocols where a few actors control the network, making them vulnerable to attacks. Permissioned networks, controlled by a select few parties, are at higher risk of cybersecurity breaches compared to decentralized blockchains with multiple validators. The shift to tokenizing trillions of dollars on these vulnerable networks poses a significant risk for the financial system.



Read more at Nasdaq: The Biggest Bank Heist in History Is Coming