In a significant development for the digital asset regulatory landscape, U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce, known as "Crypto Mom," called for regulatory restraint and simpler disclosure rules. Speaking to the SEC's Investor Advisory Committee on Thursday, Peirce warned that overly prescriptive regulations can distort capital markets. She argued that public companies spend excessive time on mandated disclosures that may obscure information for investors, suggesting the SEC should streamline these rules.
Peirce specifically highlighted the growing debate around tokenized securities and blockchain-based financial infrastructure. She noted that SEC staff are working on a potential "innovation exemption" to allow limited experimentation with tokenized securities while the agency assesses how existing securities laws apply. Peirce questioned whether additional disclosure and intermediary requirements are necessary, pointing out that blockchain systems enable faster settlement and can facilitate transactions without traditional intermediaries.
In a parallel move, the SEC's Investor Advisory Committee voted on Thursday to formally recommend the agency move forward with a tokenized-securities policy. The committee's recommendation advocates for narrow exemptions for blockchain-based trading of stocks, provided there are mandatory disclosures, routine outside supervision, and a requirement to ensure all investors receive the best order terms.
The committee acknowledged that these crypto assets still meet the legal definition of securities, as regularly contended by SEC Chairman Paul Atkins, and thus require parallel safeguards to the traditional system. The recommendation document approved by the committee also outlined risks, stating that reforms "could introduce new risks that investors do not understand and impose higher costs that outweigh the benefits of tokenization."
Chairman Atkins praised the committee's recognition that tokenization can enhance settlement efficiency, reduce risk, and eliminate unnecessary intermediaries. He stated, "I expect the Commission to soon consider an innovation exemption to facilitate limited trading of certain tokenized securities with an eye toward developing a long-term regulatory framework." This follows a December no-action letter issued to the Depository Trust & Clearing Corporation (DTCC), allowing it to explore a blockchain-based tokenization service for securities.
These regulatory discussions are unfolding alongside broader policy debates in Washington over crypto market-structure legislation, which could shape the future oversight of digital assets in the United States.
