Securities tokenization in the China–U.S. economic and technological competition: Strategic role, development potential, and policy implications
Wenwei Huang
Schar School of Policy and Government George Mason University, Arlington, Virginia, United States.
https://orcid.org/0009-0000-0366-8338
DOI: https://doi.org/10.20448/economy.v13i2.9005
Keywords: Blockchain, China–U.S. competition, Digital finance, Financial innovation, Regulatory governance, Securities tokenization, Smart contracts.
Abstract
Securities tokenization via blockchain and smart contract technologies is the start of a revolutionary innovation within international financial markets. Tokenization enhances liquidity in illiquid asset classes, lowers transaction costs in trading and settlement, improves transparency, and opens up access to altogether new categories of assets. Yet, it also raises some daunting legal, regulatory, technological, and geopolitical questions, especially against the backdrop of escalating competition between China and the United States. We analyze the conceptual basis, technical framework, international evolutionary directions, and geopolitical significance of securities tokenization with a comparative perspective between the US and China. Proponents claim that securities tokenization is not just a financial innovation but actually a strategic asset that has the potential to shape market efficiency, monetary hegemony, regulatory advantage, and international standard-setting. By comparing various aspects of policy frameworks, market practices, and representative cases across the continents, the study concludes that while the United States centers digital finance around a dollar-focused innovation approach with more free-market policies, China bears a controlled conjunction to national sovereignty, leading through pilot programs in Hong Kong and mainland China rather than other ways. The article further outlines potential risks, such as regulatory fragmentation, cybersecurity vulnerabilities, and compliance costs, while demonstrating opportunities in green finance, cross-border asset circulation, and financial inclusion. Accordingly, the future of securities tokenization will hinge on finding the appropriate equilibrium between ‘progressing regulation’ with dynamic and balanced regulation to ensure governance of technology while avoiding impediments to innovation; ‘competitive cooperation’ between traditional players and emerging actors aiming for an equilibrated coexistence, as they leverage cooperative advantages to realize technological efficiency through discovery by law.