Australia Faces Risk of Being “Left Behind” as Global Markets Transform Through Tokenization - ASIC

Australia’s financial authority has expressed concerns that the nation may fall behind in the rapidly evolving landscape of tokenization driven by blockchain technology. They have urged for prompt measures to update regulations and embrace advancements.

Key Takeaways

Urgent Need for Modernization: Australia must adapt regulations to keep pace with global tokenization trends.
Global Success in Tokenization: Other nations are successfully implementing tokenization, setting a precedent for growth.
Potential for Economic Transformation: Tokenization can enhance efficiency, transparency, and accessibility in capital markets.
Private Credit Sector on the Rise: Australia's private credit sector has rapidly grown, but faces risks under market conditions.
Call for Collective Action: Collaboration between government, regulators, and the private sector is essential for fostering innovation.

Australia Faces Risk of Being “Left Behind” as Global Markets Transform Through Tokenization — ASIC

During a speech at the National Press Club in Canberra on November 5, Joe Longo, Chair of the Australian Securities and Investments Commission (ASIC), highlighted how tokenization—the conversion of real-world assets into digital tokens—is fundamentally changing capital markets globally.

Tokenization's Impact on Capital Markets

He warned that if Australia does not make necessary adjustments, it could become a “land of missed opportunity.”

“Australia must innovate or stagnate. Seize the opportunity or be left behind,” Longo emphasized in his keynote address.

Global Tokenization Growth: A Call to Action for Australia

Longo likened the impending wave of tokenization to significant advancements in financial technology, such as the shift to electronic trading and the ASX’s CHESS system introduced in 1994.

He stated that distributed ledger technology can fundamentally reshape capital markets, enabling features like instant settlement, fractional ownership, and broader access for investors. He referenced comments from J.P. Morgan, indicating their money market funds will be fully tokenized in the next two years. Additionally, Nasdaq and the Depository Trust & Clearing Corporation (DTCC) are also progressing with tokenized trading and settlement systems.

Australia seems to lag behind in the global movement toward digitizing traditional assets. Nations like Switzerland have successfully processed over $3 billion in digital bond issues, while the UK is currently testing a digital securities sandbox through its central bank and the Financial Conduct Authority.

In contrast, Australia’s initiatives in tokenization are still nascent. Ongoing pilot projects like Project Acacia, led by the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre, are exploring tokenized debt markets.

Tokenization enables various assets—like real estate, government bonds, and private credit—to be represented digitally on blockchains, leading to improved efficiency, transparency, and liquidity. Currently, over $35.8 billion worth of real-world assets (RWAs) are tokenized on-chain, based on data from RWA.xyz.

Tokenization Value Across Asset Types

The private credit segment dominates this market with $18.7 billion, followed closely by U.S. Treasury debt at $8.7 billion, indicating a robust institutional interest in tokenized fixed-income assets. According to the 2025 Skynet RWA Security Report, the tokenized RWA market could soar to $16 trillion by 2030.

The Race for Tokenization: Can Australia Catch Up?

Longo's apprehension lies in the fact that while other countries are shifting their regulatory frameworks to attract tokenized capital, Australia risks being left behind due to inaction.

“Other nations are actively courting this capital,” he noted. “If we fail to choose, changes in our markets may not favor us.”

He emphasized the decreasing number of listed companies on the ASX and the increasing influence of private markets, warning that failing to balance transparency and innovation might pose risks to the economy. The private credit sector, now exceeding $200 billion, has increased by 500% in the past decade, yet Longo pointed out it remains untested in market downturns.

To address these challenges, Longo has outlined ASIC’s initiative to revitalize its Innovation Hub to support fintech experiments and collaborations with international regulators. ASIC is also participating in Singapore’s Project Guardian, which explores tokenized funds and digital money settlement.

He called for reforms in legal and regulatory measures to foster innovation while ensuring investor protection, asserting that “risk done well is opportunity.”

In a recent discussion with U.S. SEC Chair Paul Atkins, Longo realized the fierce competition for capital among nations, aiming to capture a larger stake in the fast-evolving tokenization market.

In conclusion, Longo urged for collaborative efforts among government bodies, regulators, and the private sector to establish modern financial foundations. He stated that for Australian capital markets to prosper, the time for action is now, reinforcing the crucial decision to innovate instead of stagnate, to evolve rather than risk becoming obsolete.