Updates 

On March 21, 2024, BlackRock launched its first tokenized fund, the BUIDL token, on a public blockchain.  While this move marks a significant step in the tokenized securities space, BlackRock’s conservative approach limits many of the benefits of tokenization. Despite this, BlackRock's entry remains a positive development for the industry.

The full analysis of BlackRock's BUIDL fund can be found here: Is BlackRock's BUIDL fund a template for tokenized securities?

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DSI welcomes Jake Villarreal in a consulting role as we embark on our new research initiatives. Jake brings extensive experience from his tenure at the Consumer Financial Protection Bureau (CFPB) and, most recently, as an Enforcement Officer at the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

Jake's initial focus at DSI will be addressing our known issue #1: evaluating whether onchain KYC should be required for permissionlessly trading tokenized securities on a blockchain. Stay tuned for developments from Jake's research!

DSI visited Consensus 2024 to hear about the progress being made regarding the tokenization of real-world assets (RWAs). There were so many RWA-related side events that our team didn't even manage to visit the main Consensus event - definitely a sign things are moving in the right direction :-)

In DSI's conversations, our team noticed many European experts endorsing Lichtenstein's tokenization framework, with some suggesting the U.S. should simply copy it. While our team plans to examine this framework in detail, you can read an English translation by clicking here.

We officially launched the Digital Securities Initiative at DC Blockchain Summit with an inaugural keynote by our founder, Nevin Freeman.

Come help sort out good regulations for tokenized publicly-traded securities in DeFi - check out our open roles here!

This website for the Digital Securities Initiative is now live! You can now share digitalsecuritiesinitiative.xyz to intro others to the project.

Use this website to track what the DSI is up to, the problems we're focusing on, and our ideas for fixing them. As you can see, we'll publish a stream of updates here on the home page for you to follow along.

We're now searching for two full-time staff members: the Senior Securities Counsel and the Inventor. Learn more on our how to contribute page.

These staff members will be hired by Confusion Capital, and their full time attention will be available for DSI.

Confusion Capital, the founding corporate participant within the Digital Securities Initiative, engaged Steptoe to get advice from Coy Garrison, former counsel to SEC Commissioner Hester Peirce, on this project.

Coy, in his role at Steptoe, will consult in an advisory capacity on behalf of Confusion Capital, supplementing the work done by full-time DSI participants.

We met with Steptoe & Cravath, Swaine & Moore, both legal firms renowned for their expertise in securities laws.

We met with Galaxy, a leader in connecting institutions with all forms of digital assets.

We met with Superstate, one of the pioneering companies working to bring securities on the blockchain.

We also met with the U.S. Securities And Exchange Commission.

We met with Securitize, the tokenization platform & transfer agent for the recently announced BlackRock USD Institutional Digital Liquidity Fund (BUIDL).

We also met with Midas, the issuer of the mTBILL token, which tracks U.S. Treasury Bond Funds 1:1.

After the initial round of R&D work and meeting with some of the relevant people and organizations, Nevin Freeman presented a keynote on the need for an industry-proposed regulatory framework for tokenized RWAs during unStable Summit in Denver.

Besides brainstorming about a potential equivalent to the DTC (Depository Trust Company) for tokenized assets (the TTC), Nevin focused on the number one sticking point from the initial R&D: “How do we get approval from relevant regulators to tokenize all securities, without degrading the freedom and programmability from permissionless systems?”.

Check out the full presentation here.

We met with individuals at the Crypto Council For Innovation, Paradigm, Energy and Commerce Committee for Crypto and AI and Consensys.

Research on the Digital Securities Initiative begins with Nevin Freeman attending the OCC’s Symposium on the Tokenization of Real-World Assets and Liabilities in DC and then doing a two-week R&D sprint along with Yens Michiels, his colleague at Confusion Capital.

At the symposium, Acting Comptroller of the Currency Michael Hsu urged everyone to “ask why, then how.” We tried to take this to heart and first articulate why we are interested in tokenization of securities in the first place, and with those goals and values articulated, then start thinking about how to achieve them.

As part of our initial R&D, we reached out to several people and organizations we thought may already have answers to the question of what is blocking regulated security tokens for retail users in the US, and what can be done to overcome those blockers. Some conversations were remote and some were in-person in Washington, DC.

We spoke with individuals at the SEC, Securitize, Swarm, the Blockchain Association, The Digital Chamber, the Mercatus Center, K&L Gates, and Morrison Foerster.