Regulators Warn of Tokenization Tsunami in US Financial Markets

CFTC Chairman Michael Selig warned that U.S. financial markets need to prepare for 'mass tokenization' and 24/7 on-chain finance. Speaking at the U.S. Treasury Market Conference, he emphasized the importance of blockchain technology in enabling near-instant settlement and real-time movement of collateral across clearinghouses, intermediaries, and investors.

Selig pointed out that regulators cannot simply modernize existing markets but need to prepare for a financial system increasingly built around blockchain, AI, and continuous trading. He noted that mass tokenization means readying markets for this transformation.

Raoul Pal, a macro investor, took the argument further by predicting that identity, contracts, attention, data, energy, and computing power could eventually become tokenized assets traded by humans and AI agents. He defined a token more broadly as information that a machine can 'read, verify, price, and trade' without human intervention.

The CFTC has already expanded eligible tokenized collateral to include certain payment stablecoins, Selig said. Pal highlighted the growing trend of TradFi moving on chain, citing roughly $300 billion in stablecoins and about $14.8 billion in tokenized U.S. Treasury funds as evidence.