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SIFMA said efforts to develop digital assets and the underlying blockchain technology could generate savings on settlement costs, increase the speed and security of issuance and settlement, and increase market transparency, among various other potential benefits.
However, SIFMA also noted that several key issues need to be addressed before the market can fully develop.
Notably, while many of the traditional regulatory frameworks and concepts that currently govern securities markets could theoretically be extended to digital assets, “many of the legal issues still need to be resolved, as market participants, regulators and lawmakers continue. to know and understand the use case of security tokens and DLT, “SIFMA said.
These issues include whether blockchain technology can meet the requirements of companies’ regulatory books and records; whether broker-dealers can meet their asset control requirements when using blockchain-based systems; and whether companies involved in clearing and settlement of digital asset transactions are to be registered.
“As the industry moves forward with the wider adoption of these assets and their supporting technology, SIFMA believes that further dialogue between industry participants and regulators will help support further growth in markets for security tokens and the adoption of the technology that supports them, ”SIFMA said.
“Security tokens and related DLTs are a prime example of emerging technologies that may have the ability to offer new and cost-effective methods of capital formation,” said Kenneth Bentsen, Jr., president and CEO of SIFMA, in a press release.
