Rep. William Timmons (SC-04) and Rep. Ritchie Torres (NY-15) recently introduced legislation, the Tokenization Report Act of 2024, that has been noticed for a hearing before the House Financial Services Committee on June 5, 2024. The Tokenization Report Act seeks to require the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration to submit a report to both chambers of Congress on trends surrounding the tokenization of traditional assets. This comprehensive report will equip the federal government with the most up-to-date understanding of the dynamic trends within the world of blockchain technology, and its relationship to our financial systems. Specifically, the report will analyze a multitude of components of blockchain systems and their trends such as:
- The benefits and risks of tokenization of traditional assets with blockchain technology
- Critical differences between permissioned and permissionless blockchains
- The current state of interoperability and integration capabilities of blockchain technology
- Emerging global regulatory approaches and their effects on capital requirements for implementation
- What technological capabilities are required to facilitate traditional asset tokenization
- How control features will affect the listed risk profile of a traditional asset once tokenized
- A summary of legal requirements for traditional assets to undergo tokenization
“I am proud to introduce the Tokenization Report Act,” said Rep. William Timmons. “This legislation will provide crucial insight into the adoption and utilization of Blockchain technology within our traditional financial institutions. Tokenization is quickly becoming a cornerstone of our Financial Sector, and Congress must understand this rapidly developing technology to govern properly. I look forward to the hearing on June 5th to discuss the bipartisan Tokenization Report Act.”
“The Tokenization Report Act, a new piece of bipartisan legislation that Rep. Timmons and I are introducing, would pave the road for the future of Blockchain,” said Rep. Ritchie Torres. “By promoting transparency, eliminating needless inefficiencies, increasing accessibility, and reducing risk, we can work across the aisle to proactively legislate smart policy for the Blockchain industry, instead of reacting to issues after they arise. Tokenization is the future and it’s time for the government to get smart and ensure that the industry works well for everyone.”
This bipartisan legislation is endorsed by Digital Asset and the Digital Chamber of Commerce.
“We commend Rep. Timmons and Rep. Torres on introducing this important bill. As tokenization continues to gain momentum, it is important that regulators in the U.S. understand its transformative impacts and the importance of choosing the right blockchain technology when tokenizing traditional assets. To reap the full benefits of tokenization, banks and other financial institutions need to choose a blockchain technology for tokenized assets that delivers both the functional control and privacy required by regulators as well as connectivity and interoperability across the market,” said Yuval Rooz, Co-Founder and CEO, Digital Asset
Chief Policy Officer of the Digital Chamber of Commerce Cody Carbone adds, "Tokenization is revolutionizing the financial sector by bringing unprecedented levels of efficiency, transparency, and security. As traditional assets move onto blockchain networks, we are witnessing a transformation that enhances trust and reduces risks. The Digital Chamber fully supports this legislation and commends Congressman Timmons for his leadership.
Background:
Asset tokenization is the process by which an issuer creates digital tokens on a blockchain or other form of distributed ledger to represent traditional or real-world assets. Asset tokenization offers many benefits, particularly in terms of liquidity, accessibility, transparency, and composability. With asset tokenization, processes that are currently manual can be automated, eliminating inefficiencies and reducing risk. Additionally, tokenization enhances transparency by enabling open tracking on blockchain networks of ownership and returns, mitigating fraud risks and improving trust. More and more of our nation’s financial institutions are exploring and implementing the use of tokenization, bringing traditional assets to blockchain networks.
