WASHINGTON, D.C. - Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, delivered the following opening statement during a full Committee hearing entitled: “Tokenization and the Future of Securities: Modernizing Our Capital Markets.” 

Thank you, Mr. Chairman. Democrats on this Committee support innovation, helping companies raise capital, and strengthening investor confidence in our financial markets. That has never been a question.  

New technologies that convert securities into digital tokens on a blockchain, known as tokenization, might be able to make stock trading more efficient through faster settlement, more transparency, and increased participation from global investors. It would be a good thing to increase demand for U.S. securities and lower costs for issuers. Democrats support technology when it delivers real benefits to the American people.  

However, our first priority should be to ensure that any innovation actually serves investors and businesses—not the middlemen looking to take advantage.  

Our caution comes from experience. Leading up to the 2008 financial crisis, we were told that securitization and new financial technologies would make borrowing easier, spread risk, and lift everyone up. What they actually did was allow Wall Street to build a process that legitimized predatory loans, stripped wealth from middle class homeowners, and created the conditions for the worst economic catastrophe since the Great Depression. Working families lost their homes. Communities of color were devastated. And the people who built and sold those products walked away richer.

While creating new types of middlemen may sound innovative in practice, it appears that tokenization also adds new fees, complexities, and risks for investors and the financial system. When a retail investor buys a tokenized stock on a decentralized exchange and pays 7,000 times more in execution costs than if they just bought the stock on NASDAQ, as a former SEC Chief Economist has documented, is that really innovative or just predatory?  

I am also concerned about the gamification of investing and gambling associated with these technologies. This Committee has already examined how trading apps use behavioral designs to turn investing into a game. Tokenization could make those trades faster, always on, and with fewer guardrails.  

And most importantly, it’s impossible for this Committee to ignore the blatant corruption from this administration. The Trump family has earned an estimated $1 billion dollars in profit from their crypto ventures. Just last month, crypto executives gathered at Mar-a-Lago, where market participants paid millions of dollars to appear on stage with President Trump’s children. When officials in the government who are approving the rules also profit from the market those would regulate, the American people rightly ask whose interests truly comes first.  

Innovation should be used to strengthen, not weaken investor protections. Innovation should be used to help working families build wealth, not extract it from them. And innovation should be used to learn from the mistakes of the past, not repeat them on a greater scale.  

So, I look forward to hearing from our witnesses and I yield back the balance of my time.