Australia Risks Being “Left Behind” as Tokenization Transforms Global Markets – ASIC

Australia’s financial regulator has issued a stark warning: the nation risks falling significantly behind in the global race to embrace tokenization, a transformative technology reshaping capital markets worldwide. Joe Longo, Chair of the Australian Securities and Investments Commission (ASIC), articulated this concern during a speech at the National Press Club in Canberra on November 5, 2025, urging swift action to modernize regulations and foster innovation.

Tokenization, the process of converting real-world assets into digital tokens on a blockchain, promises to revolutionize how assets are owned, traded, and managed. It enables fractional ownership, enhances liquidity, and offers greater accessibility for a wider range of investors. However, Longo cautioned that unless Australia adapts proactively, it could become a “land of missed opportunity.” He emphasized, “Australia must innovate or stagnate. Seize the opportunity or be left behind.”

Global Tokenization Momentum Accelerates

The global shift towards tokenized assets is gaining significant momentum, with major financial institutions and nations actively pursuing this innovation. Longo highlighted several international examples underscoring the urgency for Australia to accelerate its efforts.

Around the world, the adoption of tokenization is evident:

• Switzerland’s SIX Digital Exchange, comparable to Australia’s ASX, has successfully issued over $3.1 billion in digital bonds since 2021.
• J.P. Morgan has indicated plans to fully tokenize its money market funds within the next two years.
• Nasdaq is actively developing tokenized trading and settlement platforms, with an ambitious goal of launching 24-hour tokenized securities trading by 2026.
• The United Kingdom is also exploring the potential of digital securities through a sandbox initiative overseen by the Bank of England and Financial Conduct Authority.

These developments signify a global competitive landscape where countries are actively vying to attract capital and secure a larger share of the burgeoning tokenization market. Financial leaders such as BlackRock CEO Larry Fink support 24/7 trading concepts through tokenization of stocks, bonds, and money market funds.

The market for tokenized real-world assets (RWAs) is already substantial, reaching $24 billion in 2025, a 308% increase over three years. Projections suggest exponential growth, with the global tokenization market valued at $3.95 billion in 2025, expanding to $12.83 billion by 2032. More ambitiously, the Boston Consulting Group projects the global market for on-chain tokenization of physical assets could reach $16 trillion by 2030, while Ripple and BCG estimate the tokenized real-world assets market could soar to $18.9 trillion by 2033.

Australia’s Position and the Call for Reform

Historically, Australia has been a leader in financial technology adoption, pioneering electronic trading systems like the ASX’s CHESS in 1994 and even issuing the World Bank’s first tokenized bond, ‘bond-i,’ in Sydney in 2018. However, Longo noted that this momentum appears to have slowed.

Australia’s tokenization efforts are currently in their nascent stages. Initiatives like Project Acacia, a collaborative effort between the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC), are exploring tokenized debt markets and digital money settlement. This project includes 24 use cases involving real-money trials across various asset classes, with participants ranging from major banks to fintech companies. ASIC has provided regulatory relief to support participants in Project Acacia, fostering responsible testing of tokenized asset transactions.

Despite these efforts, Longo expressed concern about a pervasive “complacency” within the Australian market. An ASIC survey on tokenization revealed that approximately half of the market declined to participate or even meet with the regulator, with only one-third providing detailed feedback. This reluctance to engage risks Australia becoming a “passive recipient of overseas innovation” rather than an active leader.

ASIC’s Strategy for Innovation

To counter the risk of stagnation, ASIC has outlined a clear strategy:

• Relaunching the Innovation Hub: ASIC plans to revamp and relaunch its Innovation Hub. This initiative aims to actively support fintech startups in navigating regulatory complexities and accelerate market innovation.
• International Collaboration: ASIC is strengthening its cooperation with international regulators, exemplified by its participation in Singapore’s Project Guardian, which explores tokenized funds and digital money settlement.
• Regulatory Clarity: The regulator recently updated its guidance, explicitly classifying products such as stablecoins, wrapped tokens, and tokenized securities as financial products that require a license. Companies have a transition period until June 2026 to comply with these new requirements. The Australian Treasury has also proposed draft legislation to introduce Digital Asset Platforms (DAPs) and Tokenised Custody Platforms (TCPs) as new financial products, aiming to amend the Corporations Act and provide clearer regulatory frameworks.
• Advocating for Legal Reform: Longo emphasized the critical need for comprehensive legal and regulatory reform to balance innovation with robust investor protection, asserting that “risk done well is opportunity.” The Digital Finance Cooperative Research Centre (DFCRC) and partners have identified key policy reforms, including a clear taxonomy for digital assets and licensing framework reforms, to unlock the estimated $12 billion per annum in economic efficiencies for Australia.

The Benefits and Risks of Tokenization

Tokenization, underpinned by blockchain technology, offers substantial benefits to financial markets:

• Enhanced Liquidity: It can transform illiquid assets like real estate, art, and private equity into divisible, tradable digital tokens, making them accessible to a broader investor base and boosting market liquidity.
• Increased Efficiency: Tokenization streamlines processes such as issuance, transfer of ownership, and settlement, reducing the need for intermediaries, paperwork, and manual processing. This can lead to faster, often instant, settlement of transactions compared to traditional systems that may take days.
• Greater Transparency and Security: Blockchain’s immutable ledger provides an auditable trail of ownership, enhancing transparency and security through cryptographic techniques.
• Fractional Ownership: By dividing high-value assets into smaller units, tokenization democratizes investment, allowing investors to own a fraction of assets previously out of reach.

However, the rapid evolution of tokenization also presents risks, particularly in areas like regulatory uncertainty, cyber risks, and potential market volatility in newly tokenized sectors. Australia’s challenge is to navigate these complexities by establishing a clear, robust, and innovation-friendly regulatory environment that fosters growth while safeguarding market integrity and investor interests.

Conclusion

ASIC Chair Joe Longo’s warning serves as a crucial call to action for Australia. The global financial landscape is undergoing a profound transformation driven by tokenization, offering unprecedented opportunities for efficiency, liquidity, and broader market access. While Australia has demonstrated capabilities in financial innovation, a conservative approach now risks relegating it to the sidelines, merely observing overseas advancements rather than participating in and shaping them. The proactive measures outlined by ASIC, coupled with broader governmental and private sector engagement, are essential to ensure Australia capitalizes on the economic potential of tokenization and secures its competitive position in the future of global financial markets. The choice, as Longo articulated, is clear: “innovate or stagnate, to evolve or become extinct.”