Democrats also expressed concerns about the impact of recently passed crypto bills on tokenizing real-world assets. They cited the crypto market structure proposal, FIT 21, which creates an exemption for tokenized securities. Critics argue this could allow institutions to avoid oversight by the U.S. Securities and Exchange Commission (SEC). Lynch further worried that banks might use blockchain to avoid compliance costs.
Allen highlighted the implications of the recently passed CBDC Anti-Surveillance Act, which bars the Federal Reserve from exploring or issuing a central bank digital currency (CBDC). She argued that a wholesale CBDC is crucial for the widespread adoption of tokenized deposits, as it would provide a stable reserve currency for settlement processes.
Despite the focus on the potential risks, Republicans emphasized the importance of not hindering innovation. They argued that regulation should not prevent banks and other institutions from exploring tokenization’s benefits for already regulated markets.
