The U.S. House Financial Services Committee is debating the future of technology behind Wall Street this week. The committee met with guests consisting of Nasdaq, DTCC and Blockchain Association executives to discuss moving the securities infrastructure to blockchain. The main agenda of the meeting is to analyze how current regulations affect the efficiency of tokenized financial assets.
Tokenization and the Quest for Legal Clarity are on the Agenda
In the session led by Committee Chairman French Hill, the legal framework of blockchain-based assets and regulatory uncertainties came to the fore. At the session, two separate draft laws regarding the ability to keep tokenized assets and records on the blockchain are being discussed. The first requires a comprehensive study on tokenization between the Securities and Exchange Commission (SEC) and the Futures and Commodity Commission (CFTC). The second bill covers updating the technology infrastructure to allow brokerage firms to keep their books on the blockchain.
Among the names attending the invitation were senior executives of institutions that manage financial infrastructure such as Nasdaq and DTCC, as well as representatives of SIFMA and Blockchain Association. While Nasdaq stands out in digital asset infrastructure as the pioneer of global stock exchange technology, DTCC is one of the central institutions of securities clearing around the world. SIFMA is known as the voice of companies in the US securities market. Blockchain Association stands out as one of the leading organizations in the industry advocating the new generation of digital finance.
It is stated that this session will be a critical turning point not only for the cryptocurrency community but also for the financial sector in general. Because the subject aims to enable real-world assets stuck in the trial phase to be transferred more securely and quickly on the blockchain infrastructure.
Kenneth Bentsen Jr. emphasizes that “paper-based regulations from the 1940s applied today are not suitable for a blockchain-based instant reconciliation system.”
Audit and Compliance Discussion is at the Focus of the Agenda
The new draft laws were brought to the agenda right after the SEC and CFTC signed a cooperation protocol last week. This development paves the way for concrete legislative steps to be taken in Congress, while increasing coordination between regulatory institutions. Thus, it is expected that the legal infrastructure necessary for banks to expand their blockchain-based bond and Treasury product issuances will be shaped.
During the committee session, legal binding for tokenized assets, the consensus process, and the SEC’s approach to the issue were among the prominent topics. While the SEC treats tokenized assets primarily as securities, industry representatives warn that the application of old legislation to assets traded on the blockchain has created a major bottleneck in the sector.
Another striking aspect of the session is the role that stable digital currencies (stablecoins) and digital central bank money (CBDC) will play in this process. Because cash will be needed in securities transactions, it seems inevitable that regulations in this field will be brought to the agenda.
The balance that Summer Mersinger from the Blockchain Association will establish with Nasdaq and SIFMA representatives during the discussions may affect the final steps of the Congress. If common ground is found between the traditional financial world and Web3 advocates, serious pressure is expected to be put on the SEC. However, it was stated that if differences of opinion arise between the parties, the regulatory process may take longer.
In this critical period, whether the legal framework of the field will be clarified quickly or not will determine whether the uncertainties in the sector will continue, as well as whether the USA will be able to stand out in the global race.
