ASIC Warns Australia Falling Behind in Tokenization Race

Australian Securities and Investments Commission Chair Joe Longo delivered a sobering assessment of Australia’s position in the global financial innovation race, warning that institutional complacency threatens to relegate the nation to “the land of missed opportunity.” Speaking at the National Press Club, Longo emphasized that while other jurisdictions rapidly embrace blockchain-based market infrastructure, Australian institutions remain “too comfortable with the status quo.” His comments represent one of the strongest regulatory calls to action yet, highlighting the urgent need for Australia to reclaim its former position as an early adopter of market innovation.

The urgency of Longo’s message was underscored by ASIC’s recent tokenization survey, which revealed troubling levels of industry disengagement. Approximately half of market participants declined to participate in the survey or even meet with regulators, with only one-third providing detailed feedback. This passive response from the financial sector comes at a time when global competitors are accelerating their adoption of distributed ledger technology, creating what Longo described as only a short window for Australia to “seize a larger slice of this opportunity” before capital flows elsewhere.

The contrast between international progress and Australian hesitation became starkly evident during Longo’s discussions with global financial leaders. Banking giant J.P. Morgan informed him that their money market funds will be entirely tokenized within the next two years, meaning “their investors will keep earning while value is moving instantly” compared to current technology where transactions take days to settle. This represents a fundamental shift in market efficiency that Australian institutions risk missing if they maintain their current passive stance.

Global financial heavyweights are increasingly aligning around the tokenization trend. Former TD Ameritrade chair Joe Moglia and BlackRock CEO Larry Fink have both predicted a global shift toward tokenization, while EU markets chief Natasha Cazenave has emphasized the need for balanced transformation with strong investor safeguards. Longo’s meeting with U.S. SEC Chair Paul Atkins further highlighted that Australia is competing for the same global capital as its international peers, making timely adoption crucial for maintaining competitiveness.

Steve Vallas, CEO of Blockchain APAC, who observed Longo in Washington “in rooms that included Mr Longo,” noted that seeing “the pace of change in these larger and faster markets” made the urgency clear. Vallas described Longo’s remarks as “the clearest message yet from our chief market regulator” and a necessary wake-up call for traditional finance to embrace tokenization, adding that it serves as a reminder that “the world is moving and adapting and we need to do the same.”

Longo emphasized that tokenization fundamentally changes market accessibility by breaking down traditional barriers. Assets like private equity and fixed income can be “broken into smaller, more affordable units, and traded quickly and securely on a global scale,” challenging the “exclusivity” once limited to institutional players and high-net-worth investors. This democratization of finance represents both an opportunity for broader market participation and a challenge to established financial intermediaries.

Despite the transformative potential, Vallas argued that capital models aren’t the primary barrier to adoption. “Conviction comes first, capital treatment second,” he noted, suggesting that Longo’s strong signal helps corporate boards move from hesitation to action rather than using regulation as an excuse to wait. This perspective aligns with Longo’s previous cautious stance on crypto, where he called it “highly speculative” and described Bitcoin’s rise as “a classic case of the bigger fool theory,” indicating that his current push for tokenization represents a carefully considered position rather than blanket endorsement of digital assets.

The path forward, according to Longo, involves providing “regulatory certainty to innovate with confidence” through ASIC’s new digital-asset guidance. This balanced approach acknowledges both the transformative potential of distributed ledger technology and the need for appropriate safeguards, positioning Australia to potentially catch up in the global tokenization race while maintaining market integrity and investor protection standards that match the pace of technological change.