Digital Finance by Baxter Hines

Author:Baxter Hines [Hines, Baxter]
Language: eng
Format: epub
ISBN: 9781119756316
Publisher: Wiley
Published: 2020-11-24T00:00:00+00:00

How Regulators Might Respond

Regulatory authorities are starting to understand the advantages of global security token standards and thus will want to support their implementations. Those ventures taking advantage of the technology behind the security tokens and issuing such tokens in connection with projects or other assets desperately need a regulatory environment that provides less ambiguity than what we are seeing today. As these developments unfold, the market will begin to understand the relevant regulations that apply, the context under which they fall, and how compliance is accomplished. Once this clarity is assured, security tokens can be created with the correct rules applied so that the steps necessary to enforce those rules can be algorithmically coded.

Digitization increases a regulator's ability to perform effective oversight as transparency and reliability are so much greater. Security tokens help to enforce regulations in that they enhance the security's own ability to police itself and report to all what has transpired. In this type of environment, regulatory authorities will be able to apply more control and more compliance standards rather than less. On top of that, regulators will have the tools to be more proactive rather than spending needless time simply being reactive. This situation will place regulators in a stronger position to better control transgressions in the market and allow legislative goals to be better met. As a result, regulators will accept security tokens because of their incredible potential to deliver benefits not only to investors but also to governmental authorities and the regulators themselves. Perhaps there will come a time when regulators require the digitization of securities!

We seem to be on the edge of a virtuous circle where more and more understanding between regulators, the public, and security issuers and sponsors is being developed. We are simultaneously gaining legal certainty and the technology being developed to match what is needed to take security token issuance to the next level of acceptance and utilization.

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