Federal Reserve pushes Congress for technology-neutral tokenized securities rules
In brief
- Federal Reserve Vice Chair Michelle Bowman testified tokenized securities should receive identical capital treatment as traditional counterparts
- Fed developing regulatory framework for stablecoin issuers as part of modernization agenda
- Technology-neutral capital treatment removes barriers to bank participation in tokenized asset markets
- Bowman signals less prescriptive, principles-based approach to digital asset regulation
Tokenized Assets Get the Same Treatment
Bowman made clear that the delivery mechanism shouldn't affect regulatory treatment. If a Treasury bond gets tokenized and put on a blockchain, it's still a Treasury bond. Capital requirements shouldn't change based on whether the asset lives on a ledger or in a traditional clearinghouse.
This principle-based stance removes one of the biggest barriers to bank participation in tokenized securities markets. Banks have hesitated to move into blockchain infrastructure partly because regulators treated the same underlying asset differently depending on how it was held. Under Bowman's framework, that distinction disappears.
Stablecoins and the Regulatory Path Forward
The Federal Reserve is actively developing a regulatory framework for stablecoin issuers as part of the broader GENIUS Act initiatives. Bowman's testimony covered digital asset regulation, AI oversight, and modernization of the CAMELS rating system, which hasn't been meaningfully updated since 1979.
The shift in regulatory tone under Bowman has been consistent since her June 2025 confirmation as Vice Chair for Supervision: less prescriptive, more principles-based, and explicitly open to innovation. This contrasts with the more cautious stance under her predecessor, Michael Barr.
Broader Modernization Agenda
Beyond tokenized assets, the Fed issued proposals in March 2026 to modernize the US regulatory capital framework more broadly. The Community Bank Leverage Ratio was finalized at 8% with a four-quarter grace period for compliance.
Bowman characterized the banking sector as sound and resilient, pointing to strong capital ratios and healthy liquidity buffers. Yet she acknowledged that non-bank financial institutions are gaining market share from traditional banking, particularly in mortgage origination. A clearer, less punitive approach to blockchain-based settlement and asset tokenization could help banks compete in emerging markets while maintaining safety and soundness standards.
