House Republicans touted tokenization as a means to streamline traditional financial transactions, offering benefits such as faster settlement processes, lower transaction costs, and automated, secure records of ownership. In contrast, several Democrats voiced concerns about risks such as fraud, cybersecurity, and illicit finance, which are prevalent in the crypto industry.
“The [crypto and tokenization industries] have become so interwoven and synonymous that I’m cautious about the risks such as fraud, cybersecurity, and illicit finance,” stated Rep. Stephen Lynch, D-Mass.
Hilary Allen, a professor at American University’s Washington College of Law, testified that public, permissionless blockchains pose significant risks to the financial system. She suggested that token ownership be recorded on private, centralized ledgers to mitigate these risks.
“This is important because public permissionless blockchains suffer from insuperable inefficiencies and operational fragilities that render them unsuitable supporting infrastructure for real-world financial markets,” Allen argued.
