WASHINGTON, D.C.— Rep. Warren Davidson (R-OH) today introduced the Broker-Dealer Tokenization Act. This legislation allows for the integration of blockchain-based securities and payment stablecoins into the current federal framework by permitting brokers or dealers to custody both financial instruments until the Securities and Exchange Commission (SEC) formally updates the Customer Protection Rule per the requirements in the Act.
“Congress and the SEC must modernize our financial system by integrating blockchain-based securities and payment stablecoins into our existing regulatory frameworks,” said Rep. Davidson (R-OH). “This bill ensures that brokers and dealers can safely handle tokenized assets while providing the SEC with the tools to refine rules that will foster innovation and investor protection.”
Background:
- Specifically, this bill allows registered brokers or dealers to apply with the Financial Industry Regulatory Authority (FINRA) to become an approved broker or dealer for qualified tokenized securities under current rules as long as the broker or dealer takes the necessary steps set forth in the bill.
- The SEC would subsequently be tasked with updating rules within 12 months to clarify custody requirements for tokenized securities and payment stablecoins to provide a more permanent solution.
- Additionally, the SEC must also conduct a study within one year to evaluate if further guidance or rules are necessary to facilitate the development of tokenized securities markets, ensuring they are fair, orderly, and protective of investors.
Rep. Davidson's office is seeking feedback on this proposal for further discussion in the 119th Congress.