The head of the Commodity Futures Trading Commission said U.S. financial markets need to prepare for significant technological changes. During a U.S. Treasury Market conference at the Federal Reserve Bank of New York on Tuesday, CFTC Chair Michael Selig said regulators must ready themselves for "mass tokenization."
Tokenization converts assets such as stocks or bonds into digital tokens on a blockchain. Selig indicated that current markets should be adjusted to accommodate blockchain technology and artificial intelligence.
Anticipated Market Transformation
Selig expects the coming years to reshape how markets function. "With developments like tokenization, on-chain finance, and 24/7 trading, the next decade will likely bring more change to financial markets than the previous several decades combined," he said.
He added that the United States will continue to lead global markets. "Across the entire Trump administration, we've already laid the groundwork to continue doing so by embracing innovation, encouraging competition, right-sizing regulation and maintaining the trust that has made our markets the gold standard across the world," Selig said.
Regulatory Progress
The CFTC has already begun moving in these areas. Over the past year, the agency issued guidance on 24/7 trading for energy derivatives markets and has requested public comment on round-the-clock trading more broadly.
In February, the CFTC expanded its eligible collateral list to include stablecoins issued by national trust banks. Collateral is an asset that traders post to secure their positions. Selig said the agency will pursue additional measures to "encourage responsible stablecoin adoption for market participants, exchanges, and clearinghouses."
The Securities and Exchange Commission is also taking action. Last week, the SEC released an "innovation exemption" designed to permit onchain trading of tokenized stocks.
