Executives from the crypto industry told the U.S. House Financial Services Committee on Wednesday that securities laws and existing investor protections should govern tokenized securities, regardless of whether those instruments live on blockchains.
The hearing took place as lawmakers evaluate the Capital Markets Technology Modernization Act of 2026 and consider how asset tokenization could reshape capital markets while balancing innovation with investor protection and market integrity, committee chair Representative French Hill said.
Tokenized real-world assets (RWA)—traditional financial instruments represented by tokens on distributed ledgers—are being pitched as a way to cut transaction costs and speed settlement. Summer Mersinger, CEO of the Blockchain Association, told the panel that tokenization replaces manual record-keeping with transparent, timestamped records, reducing costs and reimagining aspects of U.S. financial markets.
Most witnesses agreed that existing securities rules apply to tokenized instruments: the underlying technology or record-keeping medium does not alter investor protection obligations or regulatory jurisdiction. Proponents also argued tokenization can eliminate certain intermediaries involved in settlement and clearing, enabling near-instant settlement and improving capital velocity.
Lawmakers pressed industry representatives on how issuers and trading platforms would meet know-your-customer (KYC), anti-money laundering (AML) and sanctions obligations. Representative Bill Foster asked whether tokenized assets would primarily reside on private, permissioned chains or on public blockchains where anonymous participation via self-custodied wallets is possible.
John Zecca, Nasdaq’s executive vice president and global chief legal, risk and regulatory officer, said Nasdaq’s permissioned blockchain design allows the exchange to collect KYC information at the protocol level. Christian Sabella, managing director and deputy general counsel at the Depository Trust & Clearing Corporation (DTCC), added that identifying data can be embedded at the token level, creating immutable identifiers that travel with the token even if it moves across networks.
Salman Banaei, general counsel for Plume Network, a permissionless RWA-focused blockchain, said his platform embeds AML and sanctions screening at the token level and can freeze tokens when necessary. He also cautioned, however, that current regulatory tools are not yet capable of identifying wash trades or reliably tracking every market participant across permissionless systems.
The hearing emphasized both the potential efficiency gains from tokenization and the practical challenges around surveillance, compliance and regulatory enforcement. Lawmakers and witnesses reiterated that established investor protection frameworks should apply to tokenized markets, while acknowledging that regulators and market participants will need to adapt tools and processes to monitor activity effectively.
This coverage aims to provide a clear account of the hearing and encourages readers to verify developments independently, consistent with the publisher’s commitment to transparent reporting.