House Tokenization of Digital Assets

On Jun. 5, House held a hearing on tokenization of real-world assets.

  • House held hearing on benefits of leveraging tokenization entitled Next generation infrastructure: how tokenization of real-world assets will facilitate efficient markets.
  • Published livestream of hearing and Chairman remarks, Committee memorandum.
  • Hearing Overview
  • Discussed tokenization, the process by which an entity creates a unique, digital representation of asset that can be transacted and stored with blockchain technology.
  • Entities are exploring the benefits blockchain technology brings, beyond crypto-assets.
  • Tokenizing a specific asset can help increase liquidity, enhance price discovery, increase transparency, increase access, enable fractional ownership, other things.
  • Existing laws/regulations may create uncertainty regarding interest or property rights.
  • Some regulators and commentators emphasize the need to regulate assets according to their specific risk characteristics and not necessarily their underlying technology.
  • Outlined use cases for tokenization of smart contracts, payments and deposits, private securities and illiquid markets, and physical assets; most promising is smart contracts.
  • Hearing Witnesses
  • Mr. Domingo, Co-founder and CEO, Securitize; Ms. Tessler, Partner, Sidley Austin LLP.
  • Prof. Hilary Allen, Professor of Law, American University Washington College of Law.
  • Ms. Chakar, Global Head of DTCC Digital Assets; Mr. Morgan, CEO, USDF Consortium.
  • Chairman Remarks
  • House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion Chairman French Hill delivered remarks on the importance of the legislation.
  • Tokenization can leverage the efficiency of blockchains to help modernize US markets.
  • Can automate critical processes within a financial transaction, streamline settlement.
  • Also can lower costs, which is an important component of benefitting consumers.
  • Need to ensure regulators are welcoming this innovation to modernize the markets.
  • Relevant Legislation
  • Discussed HR 8464, the Tokenization Report Act of 2024, and unnumbered bill that would require CFTC and SEC to conduct study to assess if additional guidance needed.

Regulators House
Entity Types B/D; Bank; CNSM; Depo; Exch
Reference PR, Sp, Mt, Vid, 6/5/2024; Memo, 5/31/2024; Bill HR 8464; Fintech
Functions Financial; Operations; Reporting; Risk; Settlement; Technology; Treasury
Countries United States of America
Category Central Government
Products Banking; Clearing; Cryptocurrency; Equity; Payments; Securities
Regions Am
Rule Type Guidance
Rule Date 6/5/2024
Effective Date 6/5/2024
Rule Id 214920
Linked to N/A
Reg. Last Update 6/5/2024
Report Section US Banking

Last substantive update on 06/10/2024