The Tokenization Gold Rush Has a Regulation Problem, Global Watchdog Says

The financial world’s new “tokenization” frontier is facing a sheriff’s warning. IOSCO, the global securities regulator, stated that the rush to link traditional assets like stocks to crypto tokens is creating a Wild West of new risks for investors.

According to a Tuesday report, these include confusion over legal ownership and the perils of relying on unproven third-party token issuers.

Despite a “revival of interest” and a push from some mainstream institutions, the watchdog is concerned that the very technology powering this trend is the source of its vulnerability.

The report also warns of “potential spill-over effects,” suggesting that a crisis in the crypto world could now more easily infect the traditional finance system through these new inter-linkages.