The International Organization of Securities Commissions warned that tokenisation of real-world assets brings efficiency and new market access but also introduces “new risks and vulnerabilities” for investors and market integrity. IOSCO highlighted concerns around custody, clarity of legal title, disclosure standards and secondary-market liquidity for token-based instruments. Regulators worldwide are being urged to close gaps before tokenisation scales beyond pilot projects.

Tokenisation can offer faster settlement, fractional ownership and broader investor access to private markets — benefits that appeal to asset managers and issuers. But IOSCO emphasised that these structural advantages must be matched by investor protections, robust custody models and clear legal frameworks to avoid investor harm and systemic spillovers. The watchdog recommended tighter oversight and more co-ordinated cross-border policy work.

Market participants are moving cautiously: several jurisdictions have launched regulatory sandboxes, custody standards and pilot platforms to test token issuance under controlled settings. Industry groups are pushing for interoperable standards to promote liquidity and reduce fragmentation, while custodians and exchanges race to offer compliant infrastructure. The tension between innovation speed and regulatory certainty is the central policy challenge.

For corporates considering tokenisation — real estate, private equity, infrastructure or art — the advice is to prioritise legal clarity, investor safeguards and robust technology partners. Tokenisation can unlock value, but execution mistakes or legal ambiguities can produce reputational and financial damage. Firms should work closely with regulators and reputable custody providers.

Source: Reuters.