WASHINGTON–Democrats on the Senate Banking Committee are calling a Republican cryptocurrency draft bill a “superhighway” for assets looking to avoid regulatory scrutiny.
A fact sheet by the committee’s Democratic staff warns, “Most concerningly, the bill provides a superhighway for traditional assets to escape the SEC’s authority simply by converting stocks and other non-crypto securities into tokens.”
Sen. Elizabeth Dole (D-MA), the top Democrat on the committee, had earlier been critical of the House’s version for “language that would allow non-crypto companies to tokenize their assets to evade the SEC’s regulations.”
Bill Follows Clarity, GENIUS Acts
As the CU Daily reported, the House passed the Digital Asset Market Clarity Act in July, which, along with the GENIUS Act, seeks to create a regulatory framework for crypto in part through designating how the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission will regulate digital assets.
What has Democrats concerned is term “ancillary assets” in the Senate Banking Committee Republican version, which is defined as being an “intangible, commercially fungible asset, including a digital commodity, that is offered, sold, or otherwise distributed to a person in connection with the purchase and sale of a security through an arrangement that constitutes an investment contract.”
In their statement, Senate Democrats said the term was not limited to crypto and would allow firms to sell assets to investors without protections.
‘Stripping Away’ Enforcement
“Even for Americans who invest in non-crypto companies, this would mean exposing their retirement accounts and investments to greater volatility while stripping away existing federal and state enforcement tools to protect and help investors who get scammed,” the Democrats said.
Previously, SEC Chair Paul Atkins described tokenization as an “innovation” that could lead to more efficient markets, while SEC Commissioner Hester Peirce took a stronger position, saying “tokenized securities are still securities.”
