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FollowingGovernance comes first, technology comes second
Nilmini Rubin made a sharp point in an article published Tuesday: The most frequently cited advantages of tokenization-including transparency, programmable compliance, and auditability-can only be achieved if the governance framework is designed into the system from the beginning, rather than supplemented afterwards.
The financial industry largely views tokenization as a technical issue. Rubin's position is that the more difficult work lies at the institutional level. Current cross-border payments rely on multiple intermediaries, different compliance methods, and different settlement frameworks across jurisdictions, creating friction, driving up costs, and slowing the settlement of trade, remittances, aid distribution, and interbank payments. Tokenization provides a path for more seamless settlement, but she believes that efficiency improvements can only be achieved when governance and technology develop simultaneously.
Rubin cited standards work from the Bank for International Settlements Payments and Market Infrastructure Commission-International Organization of Securities Commissions (CPMI-IOSCO) and the Financial Stability Board, as well as jurisdiction-level rules such as the Wyoming stablecoin Act, to illustrate how tokenization embeds transparency and operational safeguards in a manner consistent with broader G20 priorities. She warned that if the legal framework and regulatory expectations are not aligned, the tokenization system could reproduce the same fragmentation issues that have plagued statutory payments. The work of the Bank for International Settlements Innovation Center emphasizes the importance of this in large-scale applications: Project Nexus, which aims to connect multiple domestic instant payment systems around the world, and Project mBridge, a multi-central bank digital currency platform for wholesale cross-border payments, both place governance and legal design at the heart of their architecture and are as important as the technology itself.
Accountability, inclusiveness and limitations of infrastructure itself
Rubin extends the governance argument beyond interoperability to two other areas. In terms of transparency and resilience, she pointed out that shared ledgers, tamper-proof records and cryptographic verification are tools that can achieve real-time guarantees between agencies. Hedera's Guardian Framework demonstrates this in the carbon market with an untamperable audit trail. But she made clear that embedded accountability cannot be achieved through technology alone: It must be enforced through regulatory requirements that define how tokenized infrastructure identifies, reports and responds to systemic risks.
On financial inclusion, Rubin believes that partial ownership can expand retail channels 'investment opportunities in instruments such as government securities and create new financing paths for small businesses and emerging markets. Early pilots in Kenya and the Philippines demonstrated how digital infrastructure can lower barriers to participation. However, access alone does not mean inclusiveness. In order for participation to be responsibly scaled, tokenization systems must be built on a trusted infrastructure: reliable digital identity, meaningful consumer protection, and effective grievance mechanisms. Poorly governed markets will erode the trust needed for widespread adoption.
This article joins a growing trend of policy thinking that views regulation as a prerequisite for innovation rather than a constraint. Rubin has a fairly senior background in this argument. Before entering the field of blockchain and artificial intelligence policy, she served as a senior assistant on the U.S. Senate Foreign Relations and House Foreign Affairs Committees for 12 years.
