Yesterday, House Financial Services Committee holds a hearing to review securities tokenizationQ. Digitalization of securities is inevitable and tokenization, which uses distributed ledger technology to issue, manage and trade securities, is rapidly being adopted. But questions still remain.
Tokenization and the Future of Securities: Modernizing Our Capital Markets
Richard BakerCEO and Founder tokenovate, He shared his opinion on the hearing, stating that the current approach lacks a deeper structural change in post-trade markets and explaining that tokenization introduces long-standing inefficiencies, while faster processing does not automatically increase certainty. Tokenovate is a platform that automates post-trade, collateral management and tokenized payments for derivatives and securities.
“The debate in Washington still centers on whether tokenized securities should fit properly into existing regulatory frameworks—a necessary step, but ultimately a narrow one that risks missing the deeper structural change underway,” Baker said.
He notes that tokenization does not necessarily introduce new risks but introduces already established challenges in fragmenting the post-trade ecosystem. When a tokenized asset is forced through the “same disjointed lifecycle,” there is not a transformation but an “acceleration of existing friction.”
“What is largely missing from the discussion is a serious focus on how these tools are deployed, how lifecycle events are coordinated across participants, and how liquidity is mobilized in real time,” says Baker. “If policymakers continue to focus on form over function, they run the risk of standardizing inefficiency. The real opportunity is to define outcomes, ensure the solution is synchronized, data is consistent, and markets can operate quickly and precisely.”
