TLDR
- CFA Institute published research on policy recommendations for digital finance growth
- Legal certainty, harmonized regulations, and investor protections are needed for global scalability
- The report compares regulatory approaches across nine major jurisdictions
- Five key policy recommendations include clarifying legal status of digital tokens and facilitating network interoperability
- The US market faces legal fragmentation between state and federal authorities
The CFA Institute Research and Policy Center has released new research outlining critical policy recommendations needed to support the global growth and scalability of digital finance.
The report, published on May 6, 2025, focuses on the legal, regulatory, and cross-border frameworks required to advance the evolution of digital assets worldwide.
The research, titled “An Investment Perspective on Tokenization – Part II: Policy and Regulatory Implications,” represents the second installment in a two-part series exploring the rise of tokenization and global market responses. Dr. Giovanni Bandi, an expert in financial regulation from Cambridge Judge Business School at the University of Cambridge, collaborated on the development of the report.
The study compares regulatory approaches across nine major digital finance jurisdictions. These include the European Union, Hong Kong SAR, India, Mainland China, Singapore, Switzerland, United Arab Emirates, the United Kingdom, and the United States.
Regulatory Challenges and Recommendations
According to the findings, digital finance requires legal certainty over digital property rights, harmonized regulations, and stronger investor protections to continue its growth trajectory. The report identifies five key policy recommendations for advancing the tokenization ecosystem.
First, legislatures must clarify the legal status of digital tokens. The current absence of clear legal frameworks makes global transactions involving digital assets complicated and uncertain.
Second, facilitating network interoperability is crucial. As a divide grows between public networks that support disintermediation and private networks emphasizing control and security, harmonized standards will enable cross-border transactions.
Third, international rules must be harmonized. The report notes that varying regulatory approaches have emerged due to differing legal traditions and frameworks. Existing anti-money laundering regulations could serve as a model for broader harmonization.
Fourth, international alignment on digital asset definitions and property rights is needed. A global approach should align definitions, recognize cross-border property rights, and enable legal interoperability.
Fifth, regulatory innovation must be supported while strengthening surveillance and disclosures. Policymakers should adopt adaptive approaches that accommodate technological advances while ensuring legal certainty.
US Market Challenges
The United States remains the most important market for digital assets but faces legal fragmentation. Olivier Fines, CFA, Head of Policy Research and Advocacy at CFA Institute, highlighted the challenges within the US regulatory landscape.
“Diverging views between state and federal authorities—alongside differing political perspectives—are creating uncertainty for market participants,” said Fines. “This risks undermining the investor protection regulatory apparatus.”
The CFA Institute advocates for a consistent regulatory framework at the federal level. Fines emphasized that a coordinated, principles-based approach anchored in property law and reinforced through cross-agency alignment is urgently needed.
Dr. Bandi noted that many jurisdictions are experimenting with tokenization through regulatory sandboxes, but their legislative approaches vary. Some markets apply existing securities laws, while others enforce restrictions aimed at financial stability.
“There will need to be greater international collaboration to develop harmonized rules and shared definitions necessary for an effective market,” Bandi explained. “Regulators and industry must work together to create the legal and operational infrastructure needed for true interoperability across blockchain networks.”
The CFA Institute, as the global association of investment professionals, sets standards for professional excellence and credentials. With more than 200,000 charterholders worldwide across 160 markets, the organization champions ethical behavior in investment markets.
