Tomorrow, April 8, 2025, the Subcommittee on Digital Assets, Fintech and AI, part of the House Financial Services Committee, will hold a hearing to discuss digital assets and securities.
While the hearing memo is rather brief, there is a dire need to update existing securities law to benefit from the ability to offer and trade digital securities. The memo states:
“This hearing will examine the significant legal uncertainty surrounding the application of securities laws to digital assets, which leaves users inadequately protected and stifles innovation. While some aspects of the digital asset ecosystem fall under securities laws, others do not, and existing regulatory requirements are not fit for purpose. In cases where securities laws do apply, modifications may be necessary to preserve the benefits of digital assets while effectively mitigating their risks. This hearing will explore which digital asset activities implicate U.S. securities laws, why current regulations may not apply, and how Congress can take legislative action to address these challenges.”
While some digital assets are commodities, some have utility, and some have all of the above, others are digital securities, typically labeled as tokenization. Multiple platforms are actively working in the tokenization sector, but the market remains small. Most insiders expect all securities will become digital, but what does this actually mean? Smart contracts, atomic settlement, and DeFi are aspects of crypto that could be part of the digital securities paradigm. Hopefully, this hearing will shed some light on where Congress is on this issue.
Panelists participating in the hearing include:
- Jake Werrett, Chief Legal Officer, Polygon
- Tiffany Smith, Partner and Co-Chair of the Blockchain and Cryptocurrency Working Group, WilmerHale
- Rodrigo Seira, Special Counsel, Cooley LLP
- Alexandra Thornton, Senior Director, Financial Regulation for Inclusive Economy, Center for American Progress
The hearing, entitled “American Innovation and the Future of Digital Assets: Aligning the U.S. Securities Laws for the Digital Age,” will be live-streamed on the Committee website beginning at 10AM ET.
