#CryptoRoundTableRemarks Main speech at the Crypto Task Force roundtable on tokenization.
Thank you and good afternoon. It is a great pleasure to speak to this distinguished group at today's roundtable on tokenization. [1] I thank the panelists for their participation today.
The topic of discussion this afternoon is timely, as securities are increasingly migrating from traditional databases (or "off-chain") to blockchain-based accounting systems (or "on-chain").
This migration of securities from off-chain systems to on-chain is similar to the transition of audio recordings from analog vinyl records to cassette tapes and digital software decades ago. The ability to easily encode audio into a digital file format, which could be easily transferred, modified, and stored, triggered tremendous innovation in the music industry. [2] Audio was freed from its confines as a static, fixed-format creation. Suddenly, it became compatible and interoperable across a wide range of devices and applications. It could be combined, disassembled, and programmed to form entirely new products. This also led to the development of new hardware devices and streaming content business models, greatly benefiting consumers and the American economy. [3]
Just as the shift to digital audio revolutionized the music industry, the migration to on-chain securities has the potential to reshape aspects of the securities market, enabling entirely new methods of issuance, trading, ownership, and use of securities. For example, on-chain securities can utilize smart contracts to transparently and regularly distribute dividends to shareholders. Tokenization can also enhance capital formation by transforming relatively illiquid assets into liquid investment opportunities.