Australian Securities and Investments Commission (ASIC) Chair Joe Longo warned on Wednesday that the country risks becoming passive recipients of overseas innovation without embracing tokenization. The regulator announced plans to relaunch its Innovation Hub to support financial market advancement.
Longo told the National Press Club that Australia faces a choice between innovation and stagnation. He stated that other nations are outpacing the country despite its early adoption of electronic trading systems. The regulator chair noted that Australia issued its first tokenized bond in Sydney back in 2018.
Real-world assets worth $35.8 billion currently exist on-chain. Boston Consulting Group projects this figure could reach $16 trillion by 2030, while McKinsey & Company estimates a more conservative $2 trillion over the same timeframe.
Distributed ledger technology could fundamentally transform capital markets, similar to how the Clearing House Electronic Subregister System once revolutionized Australian trading. Longo referenced recent discussions with JPMorgan staff who indicated plans to tokenize their money market funds within two years. Four of the bank's largest money market funds hold combined assets worth $730 billion.
The ASIC chair met with U.S. Securities and Exchange Commission Chair Paul Atkins last month. Longo explained that this conversation reinforced Australia's competition with other jurisdictions to capture a larger share of the emerging tokenization market.
Market regulators in the U.S. have floated 24/7 trading concepts, which finance leaders like BlackRock CEO Larry Fink support through tokenization of stocks, bonds, and money market funds. Switzerland's digital securities exchange has already surpassed $3.1 billion in tokenized bond issuances since 2021.
ASIC released updated guidance on digital asset innovation last week, balancing development with investor protection. The revamped Innovation Hub will maintain an open-door policy for innovators facing regulatory challenges, working collaboratively on solutions rather than simply documenting problems.
Tokenizing asset classes will enable broader trader access to markets traditionally limited to institutional investors and high-net-worth individuals. The regulator aims to support innovation from the ground up as capital markets undergo rapid transformation globally.