Tokenization has the potential to transform U.S. financial markets, but outdated rules need revision for full realization. President-elect Donald Trump has a chance to lead the change.
Improving Financial Markets
Tokenization of real-world assets such as stocks and bonds can enhance many aspects of securities markets. Smart contracts ensure investors' rights, while public blockchain increases transparency. Although organizations like the U.S. Treasury support tokenization, significant integration of tokens into financial markets remains challenging due to outdated regulations.
Streamlining KYC Checks
KYC rules require identity verification for each investment application, hindering tokenization. Such demands can harm decentralized applications, necessitating KYC adaptation. Decentralized identity protocols like Verite can help conduct a single check for multiple applications.
Decentralizing Exchanges and Custody
Integrating decentralized exchanges into U.S. financial markets is complex due to heavy regulations. DTCC is testing blockchain-based technologies, which is a step towards possible integration. Meanwhile, custody of cryptocurrencies is possible through various third-party custodians providing added security.
Changes in financial market regulations require revision for successful tokenization integration. Trump's presidency offers a historic chance to advance in this direction.
