Tokenized securities need competition, not gatekeepers

Patrick McHenry, former U.S. Representative and current advisory board member at Ondo Finance, argues against imposing a single regulatory model on the burgeoning tokenized securities market. The debate currently pits proponents of existing market infrastructure, such as broker-dealers and the DTC, against advocates for customer-driven or issuer-sponsored tokenization models. McHenry identifies three distinct approaches: market infrastructure tokenization, customer-driven products like ETFs or structured notes, and issuer-sponsored direct registration. He contends that forcing all tokenized assets into a legacy framework or creating private walled gardens would stifle innovation and harm U.S. capital market competitiveness. Instead, he advocates for clear rules that allow these diverse models to compete on substance while maintaining robust investor protections. By embracing this variety, the U.S. can leverage blockchain for improved transparency, collateral monitoring, and operational efficiency without discarding established legal safeguards. Ultimately, the RWA market requires clear distinctions and responsible competition rather than new gatekeepers to ensure long-term growth and global leadership.