Carlos Domingo, co-founder and CEO of the real-world asset tokenization firm Securitize, testified at a House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion hearing Wednesday morning, urging for clearer digital asset regulation and expanded privileges for special purpose broker-dealers (SPBDs) dealing with digital assets to keep the United States from falling behind Europe.
Domingo first said that lawmakers must provide clearer definitions for digital assets and tokenized securities to differentiate them from other digital assets.
"This lack of clarity is today impeding regulators to really understand the unique characteristics of compliant tokenized securities and to regulate them accordingly," he said.
As for SPBDs, Domingo said their framework "is frustrating, difficult to achieve, limited in scope and temporary." SPBDs are institutions that the U.S. Securities and Exchange Commission granted permission to deal with specific securities, such as digital assets. "We also believe that SPBDs should be permitted to hold payments in stablecoins to facilitate efficient on-chain transactions within securities and cash. Today, this is not possible."
Domingo also said that blockchains, whether public and permissionless or private and permissioned, must be able to power tokenized securities. Alternative trading systems like peer-to-peer transfers between whitelisted wallets must be an eligible platform for trading, he said.
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"Tokenized securities can expedite and condense trading and settlement to near real-time and enable the merger of trading and post-trading activities, eliminating the need for central securities depositories. This is currently the model chosen by the European Commission for Europe, and US entities should be able to realize similar efficiencies and capabilities," Domingo said in the hearing.
"These suggestions are critical aspects for what tokenized securities framework should include," he added. "To realize this promise and avoid falling behind Europe and other markets where regulation for tokenized securities is more established, I encourage you to prioritize legislation or encourage clear SEC guidance that facilitates safe responsible and compliant tokenization of financial assets as soon as possible."
Securitize helped the asset management giant BlackRock launch its tokenized fund, BlackRock USD Institutional Digital Liquidity Fund (BUIDL), in March. On May 1, BlackRock led a $47 million strategic funding round for the firm, The Block previously reported.
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