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 <p class="is-style-lead">The Bank of England’s financial stability report highlights the potential risks and increasing interest in asset tokenization within the financial sector, underscoring the need for global regulatory coordination.</p> 
 <p>The report notes an increasing positivity among banks towards leveraging crypto technologies, including programmable ledgers and smart contracts, for the tokenization of money and real-world assets.</p> 
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    <p lang="en" dir="ltr">Sarah Breeden sets out the key findings from our Financial Stability Report, which shows that the outlook for global economic growth remains subdued. However UK banks remain resilient and strong enough to continue supporting households and businesses. https://t.co/oZoGXYozgq pic.twitter.com/vmc8Gv3Qny</p>— Bank of England (@bankofengland) December 6, 2023
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  </svg> <span class="cn-block-related-link__prefix"> You might also like: </span> India-led G20 proposes global crypto regulatory framework 
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 <p>Tokenization, defined as issuing a digital <a rel="dofollow" title="asset" href="https://thebittimes.com/tag/asset.html">asset</a> representation, is rapidly gaining traction in the crypto ecosystem and is projected to evolve into a $10 trillion market by 2030, according to 21.co, an <a rel="dofollow" title="asset" href="https://thebittimes.com/tag/asset.html">asset</a> management company. This trend is exemplified by moves from major financial players like HSBC venturing into a digital-<a rel="dofollow" title="assets" href="https://thebittimes.com/tag/assets.html">assets</a> custody service focused on tokenized securities. Societe Generale has recently executed a €10 million sale of tokenized green bonds on the Ethereum (ETH) <a rel="dofollow" title="blockchain" href="https://thebittimes.com/tag/blockchain.html">blockchain</a>.</p> 
 <p>However, this growth trajectory raises concerns. The Bank of England’s report cautions that “increasing size could pose <a rel="dofollow" title="risks" href="https://thebittimes.com/tag/risks.html">risks</a> for the wider financial environment.” The expansion could “increase the interconnectedness of markets for crypto and traditional financial <a rel="dofollow" title="assets" href="https://thebittimes.com/tag/assets.html">assets</a> (since they are represented on the same ledger) and create direct exposures for <a rel="dofollow" title="systemic" href="https://thebittimes.com/tag/systemic.html">systemic</a> institutions.”</p> 
 <p>Acknowledging the current limitations of these <a rel="dofollow" title="risks" href="https://thebittimes.com/tag/risks.html">risks</a>, the Bank of England underlines the necessity of ongoing vigilance and global regulatory cooperation. The report asserts, “International coordination can reduce the <a rel="dofollow" title="risks" href="https://thebittimes.com/tag/risks.html">risks</a> of cross-border spillovers, regulatory arbitrage, and market fragmentation,” echoing the sentiments of lawmakers cheering for a coordinated regulatory approach to fund tokenization.</p> 
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  <svg class="cn-block-related-link__icon icon" aria-hidden="true"> <use xlink:href="#"></use> 
  </svg> <span class="cn-block-related-link__prefix"> Read more: </span> Bank of England governor calls crypto ‘extremely speculative’ 
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<p>Source: <a rel="dofollow" target="_blank" href="https://thebittimes.com/tokenizing-assets-on-blockchain-may-elevate-systemic-risks-warns-bank-of-england-tbt72991.html">https://thebittimes.com/tokenizing-assets-on-blockchain-may-elevate-systemic-risks-warns-bank-of-england-tbt72991.html</a></p>

Tokenizing assets on blockchain may elevate systemic risks, warns Bank of England

TheBitTimes

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