The World Federation of Exchanges (WFE) has submitted a paper to the SEC’s Crypto Task Force arguing that tokenization’s benefits lie in post trade infrastructure, not in trading, and that innovation should remain anchored in established regulatory frameworks. The WFE strikes a conciliatory tone, acknowledging that framing crypto and traditional markets as adversaries does a disservice to both sides.
The paper, titled “The Innovation Advantage in Well-Regulated Markets,” contends that existing equity market infrastructure is already highly efficient and identifies three post trade areas where tokenization can add value: reconciliation, collateral mobility, and programmable automation of lifecycle events.
On trading, the WFE argues that its members’ matching engines outperform blockchain based venues, and that disintermediated models risk conflicts of interest that current regulation is designed to prevent. But the underlying message is clear: core price formation should stay on regulated exchanges, with tokenization confined to improving the plumbing behind them. While there’s no doubt that centralized order books and CCP netting are highly efficient, the paper misses a key point regarding the demand driving tokenized securities.
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