The Blockchain Association today announced the launch of the Digital Securities Working Group, which will coordinate the crypto industry’s work with regulators and policymakers to modernize securities regulations. U.S. investors and financial markets deserve clear regulations in order to realize the full benefits of digital securities. Alex Levine, Chief Legal Officer of TokenSoft, and Georgia Quinn, General Counsel of CoinList, will co-chair the working group.
Digital securities are blockchain-based digital contracts for assets that meet the definition of a “security” under current U.S. law. Today, many securities, like real estate investment and corporate equity contracts, are ultimately paper-based. “Tokenizing” these assets would make them easier to manage and trade, improving the efficiency and liquidity of such financial markets. In turn, efficient and liquid markets protect investors’ access to their assets and enhance market participants’ ability to raise capital.
However, current securities regulations largely prohibit U.S. financial markets from realizing these benefits, because the regulations were designed to manage the issuance, custody, and trading of paper-based securities. Compliance with many U.S. securities regulations is ultimately based on the proper handling of formerly paper-based securities contracts, which makes compliant uses of blockchain-based digital securities unnaturally limited today.
While the staffs of the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) have acknowledged that “digital asset securities and related innovative technologies raise novel and complex regulatory and compliance questions and challenges,” digital securities can actually ensure compliance with existing regulatory requirements through automation while bringing a level of transparency, certainty, and accountability to transactions not previously possible. As a result, blockchain innovators are both proposing solutions and seeking answers in order to bring these additional benefits of digital securities to a broad investor market in the United States.
Blockchain Association’s Digital Securities Working Group looks forward to working with members of Congress, the SEC, FINRA, other U.S. regulators, and the broader blockchain industry to promote the adoption and sound regulation of digital securities in the United States.