CFA Institute Issues Policy Implications and Recommendations for Digital Finance Amid Rising Interest for Tokenization

New research published today by the CFA Institute Research and Policy Center outlines policy recommendations critical to supporting the growth and scalability of digital finance. The report focuses on the legal, regulatory, and cross-border frameworks needed to advance the global evolution of digital assets.

Developed in collaboration with Dr. Giovanni Bandi, an expert in financial regulation and regulatory technology at Cambridge Judge Business School, University of Cambridge, An Investment Perspective on Tokenization – Part II: Policy and Regulatory Implications, is the second in a two-part series exploring the rapid rise of tokenization and how markets are responding globally.

The research compares the regulatory approaches of leading digital finance jurisdictions—namely the European Union, Hong Kong SAR, India, Mainland China, Singapore, Switzerland, United Arab Emirates, the United Kingdom, and the United States. It finds the need for legal certainty over digital property rights, harmonized regulations, and stronger investor protections to advance the continued growth of digital finance.

Olivier Fines, CFA, Head of Policy Research and Advocacy at CFA Institute, comments:  

“Digital finance is a complex, controversial, and fast-moving field that is challenging policy and regulatory frameworks. Several jurisdictions are taking the lead, but no single market can deliver all the reforms required to scale tokenized finance. Meaningful international co-ordination and thoughtful legal reform will be essential to unlock the market’s full potential.”  

“Distributed ledger technology offers new models of investment and asset transfer, but it also raises fundamental questions around digital property rights and cross-border legal enforceability. Our research underscores the urgent need for international consensus on the recognition of ownership rights in the digital space.”

Giovanni Bandi, PhD, lead author of the report, comments:

“Many jurisdictions are experimenting with tokenization through regulatory sandboxes, but their legislative approaches vary. Some markets are applying existing securities laws, while others are enforcing restrictions aimed at financial stability. Ultimately, there will need to be greater international collaboration to develop the harmonized rules and shared definitions necessary for an effective market. Just as importantly, regulators and industry will need to work together to create the legal and operational infrastructure needed for true interoperability across blockchain networks.” 

Policy Recommendations:

• Clarify Legal Status of Digital Tokens
  • Legislatures must establish the legal status of digital tokens. The current lack of legal frameworks complicates global transactions involving digital assets.
• Facilitate Network Interoperability
  • As a divide grows between public networks (which supports disintermediation) and private networks (which emphasize control and security), harmonized standards and clear legal frameworks for asset ownership will be key to enabling cross-border transactions.
• Harmonize International Rules
  • Varying regulatory approaches have emerged due to differing legal traditions and regulatory frameworks. Existing anti-money laundering regulations can serve as a model for broader harmonization of tokenization regulations.
• Align International Rules on Digital Asset Definitions and Property Rights
  • A global approach should aim to align definitions of digital assets, recognize cross-border property rights, and enable legal interoperability. Mutual recognition agreements among jurisdictions — especially for dispute resolution and token classification — would enhance legal clarity and facilitate cross-border digital asset transactions.
• Support Regulatory Innovation, Strengthen Surveillance and Disclosures
  • Policymakers should adopt adaptive regulatory approaches that accommodate evolving technological advances while ensuring legal certainty. Strengthened safeguards, disclosure standards, and enhanced market surveillance are essential for protecting stakeholders in tokenized markets. 

Olivier Fines, CFA, adds:

"The United States is still the most important market for digital assets, but also one of the most legally fragmented. Diverging views between state and federal authorities—alongside differing political perspectives—are creating significant uncertainty for market participants and risk undermining the investor protection regulatory apparatus. We strongly advocate for a consistent, coherent regulatory framework at the federal level. A more coordinated, principles-based approach – anchored in property law and reinforced through cross-agency alignment – is urgently needed to support responsible innovation and market confidence.”