The International Organization of Securities Commissions (IOSCO) published a final report from its Fintech Task Force monitoring exercise on the tokenization of financial assets, assessing current adoption of distributed ledger technology (DLT) in capital markets and the potential implications for market integrity and investor protection. IOSCO concludes that commercial adoption remains nascent and incremental, and that its technology-neutral principles and guidance are generally applicable to tokenization arrangements. Based on regulatory surveys, literature review and stakeholder outreach, IOSCO found that 91% of respondents reported nil or very limited commercial tokenization use-cases, with fixed income instruments and tokenized money market funds showing the most activity. The report notes that while issuance and servicing processes have evolved, distribution, secondary trading and settlement often continue to rely on conventional infrastructure due to liquidity and accessibility constraints, while scalability is also limited by insufficient cross-blockchain interoperability and a lack of credible on-chain settlement assets. Key risk areas highlighted include legal uncertainty around the authoritative record of ownership and settlement finality, operational and cyber vulnerabilities in DLT networks and smart contracts, custody and private key risks, and potential spillovers from growing linkages between tokenized money market funds and crypto-asset markets, including use as “stablecoin” reserve assets and as collateral. IOSCO’s survey of regulatory responses indicates that most members are applying existing securities frameworks on a “same activity, same risk, same regulatory outcomes” basis, with some supplementing these through specific guidance, sandbox regimes, and new or amended laws and regulations to address tokenization-related legal and operational issues.
IOSCO 2025-11-25
International Organization of Securities Commissions final report finds 91% of jurisdictions see nil or very limited tokenization use-cases
The International Organization of Securities Commissions (IOSCO) released a report on the tokenization of financial assets, highlighting limited commercial adoption of distributed ledger technology (DLT) in capital markets. The report identifies key risks such as legal uncertainties, operational vulnerabilities, and potential spillovers from tokenized money market funds. IOSCO notes that most regulators apply existing securities frameworks to tokenization, with some introducing additional guidance and regulations.