HOUSE FINANCIAL SERVICES COMMITTEE
SUBCOMMITTEE ON CAPITAL MARKETS
For questions on the note below, please contact the Delta Strategy Group team.
On June 25, the House Committee on Financial Services Subcommittee on Capital Markets held a hearing entitled “From Wall Street to Main Street: The Future of How America Invests.” The witnesses in the hearing were:
- Jody Jonsson, Vice Chair, Capital Group
- Matthew Ringgenberg, Emma Eccles Professor of Finance, David Eccles School of Business, University of Utah
- Jeffrey Ptak, Managing Director, Morningstar
- Tom Quaadman, Chief of Government Affairs and Public Policy, Investment Company Institute
- Natalia Renta, Associate Director for Corporate Governance & Power, Americans for Financial Reform
Below are several key takeaways from the hearing prepared by Delta Strategy Group.
KEY TAKEAWAYS
Crypto & Digital Assets
- Quaadman highlighted Commissioner Peirce’s leadership at the Securities and Exchange Commission (SEC) as an important step for establishing a workable regulatory framework for digital assets.
- Representative Lynch (D-MA) raised concerns that President Trump issued pardons to several individuals previously convicted of crypto-related financial crimes, including Binance’s Changpeng Zhao and Silk Road’s Ross Ulbricht, and noted the administration has dropped sixty percent of inherited crypto enforcement actions.
Tokenization
- Representative Steil (R-WI) highlighted tokenization and T+0 settlement as major opportunities and asked witnesses how policymakers should approach the associated risks.
- Quaadman noted that significant tokenization activity involving U.S. securities is already happening in Europe and highlighted the importance of establishing a domestic regulatory framework to keep pace.
- Quaadman cited the European Union’s (EU’s) AI Act as a cautionary tale against blanket regulation and called for a surgical approach to digital asset and tokenization policy that identifies specific gaps rather than imposing broad frameworks.
- Quaadman acknowledged that while T+0 settlement creates efficiencies, there are unresolved downstream consequences that need to be carefully thought through to avoid disrupting the broader system.
- Jonsson said tokenization is a matter of when, not if, for industry-wide adoption. Quaadman estimated five years or less.
Innovation
- Multiple Republican members and witnesses highlighted the 2019 Exchange Traded Fund (ETF) rule as a model policy success, with Jonsson noting active ETFs are now growing faster than passive ETFs.
- Ptak noted that the 2019 ETF rule has largely met its intent and stated that any future innovation must preserve transparency and comparability.
- Several members urged Senate passage of the Incentivizing New Ventures and Economic Strength Through Capital Investment (INVEST) Act, which addresses public capital market growth, 403(b) Collective Investment Trusts (CIT) access for nonprofit workers, and disclosure reforms.
Broker Dealers & Agentic AI
- Ranking Member Sherman (D-CA) and Representative Foster (D-IL) sent a letter to SEC Chairman Atkins raising investor protection, liability, and accountability concerns around agentic AI trading systems being deployed by retail brokerages.
- Representative Foster cautioned that retail investors may unknowingly adopt low-cost foreign AI trading models built on compromised datasets, leaving them vulnerable to being traded against, and noted crypto firms are among those already deploying such agentic tools.
- Ringgenberg cautioned that regulators and policymakers do not yet fully understand how AI models derive their trading recommendations, urging careful evaluation before broader deployment.
Prediction Markets
- Representative Casten (D-IL) cautioned that Robinhood’s embrace of crypto and prediction markets represents a continuation of its gamification business model, which he views as harmful to retail investors.