Butler County Today

Rep. Warren Davidson of Ohio has introduced the Broker-Dealer Tokenization Act, a piece of legislation aimed at integrating blockchain-based securities and payment stablecoins into the current federal framework. The act would allow brokers or dealers to custody these financial instruments until the Securities and Exchange Commission (SEC) updates the Customer Protection Rule as required by the Act.

"Congress and the SEC must modernize our financial system by integrating blockchain-based securities and payment stablecoins into our existing regulatory frameworks," stated Rep. Davidson. "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."

The bill proposes that registered brokers or dealers can apply with the Financial Industry Regulatory Authority (FINRA) to become approved for qualified tokenized securities under current regulations, provided they adhere to steps outlined in the legislation. The SEC is tasked with updating rules within 12 months to clarify custody requirements for these digital assets, aiming for a permanent solution.

Furthermore, the SEC is required to conduct a study within one year to assess if additional guidance or rules are needed to facilitate fair, orderly, and protective development of tokenized securities markets.

Rep. Davidson's office is currently seeking feedback on this proposal for further discussion in the upcoming 119th Congress.