DTCC Digital Belongings international head and managing director Nadine Chakar made a compelling case for the advantages of tokenization in her testimony earlier than the Home Monetary Companies Subcommittee on Digital Belongings on June 5.
Chakar’s testimony centered on the transformative potential of tokenizing real-world belongings and its implications for the US monetary markets.
She highlighted DTCC’s pivotal position in modernizing the monetary {industry} via digital securities and tokenization options. The agency has been a cornerstone of monetary market infrastructure for over 50 years, processing a staggering $3.0 quadrillion in securities transactions in 2023 alone.
She informed lawmakers:
“Tokenization represents a pure evolution in our efforts to simplify advanced monetary processes and improve market efficiency.”
Tokenization advantages
In her detailed testimony, Chakar outlined the numerous benefits of tokenization in processing and managing the lifecycle of monetary belongings, comparable to tokenized securities.
Chakar defined that tokenization converts rights or asset possession models into digital tokens on a blockchain, probably revolutionizing the processing of conventional monetary belongings.
She highlighted two major kinds of tokenization: Digital Twin Tokens and Safety Tokens — each aiming to streamline transactions, cut back prices, and broaden investor entry.
She stated:
“Tokenization provides elevated effectivity and decrease prices by enabling swifter and extra environment friendly transactions, decreasing processing inefficiencies, and higher managing reconciliation.”
Chakar additionally famous that tokenization may develop the investor base by making belongings extra accessible via elevated automation and better information availability.
Challenges
Regardless of the promising developments, Chakar acknowledged the challenges of integrating DLT into current monetary techniques.
She pressured the necessity for industry-wide coordination, standardization, and strong regulatory frameworks to handle safety dangers, compliance issues, and interoperability points.
In keeping with Chakar:
“Transitioning to a DLT-based monetary system might be a monumental activity. It requires concerted efforts from your entire monetary ecosystem, together with regulatory our bodies, to determine a safe and resilient digital belongings infrastructure.”
Chakar urged lawmakers to align tokenization rules with current monetary frameworks, advocating for the “identical exercise, identical threat, identical regulation” precept.
She additionally known as for additional research on guaranteeing the authorized enforceability of tokenized belongings, operational resiliency, and applicable remedy below insolvency regimes.
