Australia must act on tokenization or be 'left behind,' ASIC chair warns

Tokenization will be central to the next phase of Australia's financial market development, said the country's top financial regulator.

Australian Securities and Investments Commission (ASIC) Chair Joe Longo said in a Wednesday speech that the country must "seize the opportunity or be left behind" as distributed ledger technology transforms capital markets worldwide. 

Longo noted that tokenization "could fundamentally transform our capital markets" by breaking assets into smaller, tradable units and enabling instant settlement. 

Yet Australia risks becoming the "land of missed opportunity," Longo warned, as other nations forge ahead. He said that Switzerland's digital securities exchange has surpassed $3.1 billion in tokenized bond issuances since 2021. J.P. Morgan plans to fully tokenise its money market funds within two years, according to Longo. Nasdaq has proposed launching 24-hour tokenized securities trading by late next year.

"Once, Australia was one of the early adopters of innovation in markets," Longo said, noting the country's pioneering electronic trading systems. "Now, other countries are outpacing us."

"So today I can announce that we will review and relaunch the ASIC Innovation Hub, with a focus on seeking out ways ASIC can support financial market innovations in Australia," Longo added.

Longo said the revitalized Innovation Hub will maintain an open-door policy for innovators facing regulatory hurdles, with ASIC pledging to work collaboratively on solutions rather than simply cataloging problems, while also supporting the government's review of the Enhanced Regulatory Sandbox to boost Australia's fintech sector.

The speech builds on ASIC's recent regulatory efforts. Last month, the regulator updated its guidance on digital assets, clarifying that stablecoins, wrapped tokens, and tokenized securities are financial products requiring licensing. ASIC granted firms a transition period until June 2026 to comply.

Last month, Australia's Treasury also proposed draft legislation requiring crypto exchanges and certain crypto service providers to hold financial services licenses.