The Federal Reserve System (FRS) has examined the pros and cons of the tokenization process. In its review published on the official website, the FRS notes that tokenization is an innovation in the financial sector, rapidly growing in the cryptocurrency market.
According to FRS representatives, tokenization can provide several significant advantages, including investors gaining access to markets they either did not have access to before or where entry was costly. For example, tokenization of real estate allows for investment in a portion of a property, and investors can purchase shares in specific commercial or residential buildings.
Tokenization also has the potential for use in the lending sector, where tokens can be used as collateral. Additionally, transactions involving tokenized assets can be conducted faster than with real assets.
The FRS concludes that at the moment, tokens do not pose a significant threat to financial stability, as the overall value of tokenized markets is relatively small compared to cryptocurrency markets and traditional stock markets. However, according to the regulator, there are potential risks of instability in cryptocurrency markets and challenges to the financial stability of the traditional financial system with further growth in the scale of tokenization.