ASIC chief warns Australia risks losing its lead as global markets embrace tokenisation

Australia risks losing its competitive edge in global capital markets as other jurisdictions accelerate the tokenization of financial assets, with the country’s securities regulator warning that sluggishness could push Australian issuers and investors abroad.

While other countries are quickly embracing this blockchainBased on market infrastructure, Australian institutions remain “too comfortable with the status quo,” Joe Longo, chairman of the Australian Securities and Investments Commission, said in a speech to the National Press Club on Tuesday.

Longo said tokenization changes the “exclusivity” that was once limited to institutional players and wealthy investors, by allowing assets such as private equity and fixed income “to be divided into smaller, more affordable units, and traded quickly and securely on a global scale.”

“Australia faces a choice: innovate or stagnate,” Longo said. “Australia was once one of the early adopters of innovation in the market… Now other countries have surpassed us.”

Tokenization in Australia

Speak with DeclutterSteve Vallas, CEO of Blockchain APAC, said Longo’s comments “send a strong signal to the traditional financial world” to embrace tokenization. He called it a wake-up call for Australia and “the clearest message yet from our top market regulator.”

Vallas, who said he was in Washington “in rooms where Mr. Longo was also present,” said seeing “the pace of change in these bigger and faster markets” highlighted the urgency, adding that it was a reminder that “the world is moving and adapting and we must do the same.”

The ASIC chairman noted that banking giant JP Morgan told him their money market funds will be fully tokenized within the next two years, meaning “their investors will continue to earn while value moves instantaneously,” compared to current technology that takes days to complete transactions.

Distributed ledger technology allows new players to “provide services in the financial market and challenge the status quo,” he added.

Longo’s concerns come as US industry leaders, including former TD Ameritrade chairman Joe Moglia, and BlackRock CEO Larry Fink, predict a global shift towards tokenization, while EU market chief Natasha Cazenave has warned that the transformation must be accompanied by strong safeguards for investors.

The “land of missed opportunities”

The ASIC chairman said he met with US SEC chairman Paul Atkins where it became clear to him that Australia is vying for the same global capital as its peers, with only a short period to seize “a greater share of this opportunity, and if the nation remains passive it risks becoming “the land of missed opportunities”.

The agency’s recent tokenization survey reportedly revealed a troubling withdrawal from the financial sector, as about half of market participants declined to participate or even meet with regulators, while only a third provided detailed feedback, Longo said.

Vallas argued that capital models are not the main barrier. He noted that “conviction comes first, and capital treatment second,” and that Longo’s signal helps boards move from hesitation to action rather than using regulation as an excuse to wait.

Longo, who previously called crypto “highly speculative” and the rise of Bitcoin “a classic case of the greater fool theory”, said ASIC’s new digital asset guidelines aim to give the industry “regulatory certainty to innovate with confidence”.