Senate Hearing Signals Progress on Digital Assets
- jacobclayton56
- Mar 4
- 3 min read
On February 26, 2025, the U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hybrid hearing titled “Exploring Bipartisan Legislative Frameworks for Digital Assets.” Chaired by Senator Tim Scott (R-SC), with Senator Cynthia Lummis (R-WY) steering the Digital Assets Subcommittee, the session featured testimony from Lewis Cohen (Cahill Gordon & Reindel LLP), Jonathan Jachym (Kraken Digital Asset Exchange), Jai Massari (Lightspark), and Timothy Massad (Harvard Kennedy School). As a firm dedicated to delivering actionable intelligence on emerging technologies, SAGINT views this hearing as a pivotal moment for digital asset regulation—particularly for the tokenization of Real World Assets (RWA). While the discussion showcased intent, significant regulatory gaps remain unaddressed for this transformative use case.
The tokenization of RWAs—representing tangible assets like real estate, commodities, or securities on blockchain networks—holds immense potential to enhance liquidity, reduce transaction costs, and democratize access to capital markets. At SAGINT, we recognize its capacity to bridge traditional finance and decentralized systems. However, realizing this potential requires a robust legislative framework, a point underscored by the hearing’s focus on bipartisan solutions. Senator Scott’s emphasis on digital assets as a priority for the 119th Congress, paired with Senator Lummis’s advocacy for market structure reforms (e.g., the FIT21 Act) and stablecoin legislation (e.g., the GENIUS Act), signals a receptive environment. Yet, from a regulatory perspective, the hearing exposed both progress and persistent challenges specific to RWA tokenization.
The testimony provided valuable insights. Cohen advocated for a balanced regulatory approach, echoing frameworks like the Responsible Financial Innovation Act, which could standardize token issuance and trading for RWAs. Jachym’s push for expanded Commodity Futures Trading Commission (CFTC) oversight of spot markets aligns with the need to classify tokenized commodities—a key RWA category—under clear jurisdictional lines. Massari highlighted stablecoins as a backbone for digital payments, a critical infrastructure piece for settling RWA transactions efficiently. Meanwhile, Massad’s critique of jurisdictional fragmentation and offshore risks pointed to enforcement hurdles that could undermine tokenized asset markets if left unresolved.
From SAGINT’s regulatory lens, several considerations emerge for RWAs. First, legal clarity on asset-backed tokens is paramount. Unlike cryptocurrencies, RWAs tie directly to physical or financial assets, necessitating precise definitions of ownership, transferability, and redemption rights under U.S. law. The hearing’s nod to past bills suggests progress here, but specifics remain elusive. Second, the proposed CFTC expansion raises questions of capacity. Regulating tokenized real estate or commodities demands expertise and resources the agency may lack without significant reinforcement—a concern Jachym’s testimony did not fully address. Third, stablecoins, as Massari noted, are integral to RWA ecosystems, yet the GENIUS Act’s focus on U.S.-based issuers overlooks offshore dominance (e.g., Tether), risking uneven enforcement and market distortion.
Cross-border interoperability adds another layer of complexity. RWA tokenization is inherently global—real estate in Dubai or gold in Singapore can be tokenized and traded on U.S. platforms. The hearing’s failure to grapple with international coordination, as Massad hinted, leaves a gap that could expose investors to unregulated foreign issuers or jurisdictional arbitrage. SAGINT’s assessments of illicit finance risks in digital markets reinforce this: without global alignment, tokenized RWAs could become vectors for laundering or fraud, undermining trust.
The Trump administration’s pro-crypto stance and Scott’s cross-chamber working group offer momentum, but intent must translate into precision. A viable RWA framework requires: (1) statutory definitions tying tokenized assets to existing property and securities laws; (2) a fortified CFTC or a hybrid SEC-CFTC model with adequate funding; (3) stablecoin rules that address offshore players; and (4) collaboration with international regulators to harmonize standards. The hearing laid groundwork—FIT21 and GENIUS show bipartisan will—but it stopped short of tackling these RWA-specific needs head-on.
