Amina Hassan and Erin Pamukcu Examine Expansion of Tokenization into Traditional Finance in Law360

Amina Hassan and Erin Pamukcu authored an article in Law360 examining the legal and regulatory implications of tokenization moving into traditional financial markets.

The article discusses a July 15 announcement by the Depository Trust Company (DTC), touting its successful use of tokens representing DTC-held securities to complete real world trades, signaling that tokenization is no longer limited to crypto-based trading ventures.

This announcement is part of a broader trend across industry-regulated financial institutions, which is testing whether settlements in traditional finance can be made faster, more programmable and more interoperable by moving them onto distributed ledgers.

The article highlights three initiatives in different sectors of the financial industry that illustrate this trend: the DTC tokenization pilot; an intra-bank initiative to launch a shared tokenized-deposit network; and a collaboration between Visa Inc. and fintech Brale to explore stablecoin-based settlement of institutional payments.

“Rather than creating a separate legal ecosystem, these initiatives reflect efforts to integrate tokenization into existing legal and regulatory frameworks for securities, banking, and payments settlements while preserving the underlying legal rights and obligations of market participants,” the authors write.

Ultimately, the article argues that these initiatives don’t alter the existing legal and regulatory framework for settlements, but are nonetheless incredibly significant to financial institutions, fintech companies and counsel navigating this sector.

“Together, these initiatives represent an incremental but potentially important step toward integrating distributed ledger technology into traditional financial markets,” the article states.

Read the article.