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IMPLICATIONS
Concluding thoughts on implications
This section of the report considered some of the business and operational implications of tokenisation in financial markets, and
the fact that it enables business innovation through the DLT-based decentralised financial market infrastructures. There is no expectation that there would be an immediate, nor full, transition to tokenised markets, particularly in the short term, but, more likely, that DLT- based markets would continue to develop alongside existing financial markets. Tokenisation and DLT-based decentralised infrastructure introduced a few complexities and uncertainties in relation to the current legislative and regulatory framework. Several central banks and international standard-setting bodies are exploring the various technological, legal, operational and potentially systemic implications of new technology on the existing functions and architecture of
the financial markets, and these learnings underscore the need for
a measured and informed response to any adaptations. From a
South African perspective, the regulators are cautiously considering developments before implementing regulatory changes, fully appreciative that regulated entities are waiting for regulatory certainty before committing to enter DLT-based token markets. In the meantime, developments in unregulated markets continue to emerge.
In some respects, South Africa faces an opportune time to consider how to treat these DLT-based platforms and the use of tokenisation
in the financial markets, as legislative reforms in the payments and financial markets are underway to update the legislative framework in response to market developments and technological innovation. When reviewing and developing new or updated legislative and regulatory frameworks, care should be taken to ensure that legislation is technology neutral and principle based, and should define the desired outcomes and allow for the detail to be further clarified by the relevant regulatory agencies in response to changing market conditions in
a manner that is appropriate to the South African environment.
Careful consideration is required when developing interconnected frameworks to avoid unintended consequences – and it is envisaged that the policies, mechanisms and legal frameworks will continue to be developed through collaboration between policy makers, regulators and the industry.
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