Key Highlights
- Hester Peirce said the SEC staff is working on an innovation exemption for the limited trading of certain tokenized securities.
- She stressed the proposal is far narrower than the “blanket” exemption referenced in the committee’s draft recommendation.
- Peirce asked whether tokenized markets need new disclosure rules, whether atomic settlement really requires relief from T+1 rules, and whether third parties should need issuer consent to tokenize equities.
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce said on Thursday that agency staff is working on a limited innovation exemption for certain tokenized securities, but used the same remarks to push back on broader recommendations being considered by the SEC’s Investor Advisory Committee.
Speaking at the committee’s March 12 meeting in Washington, Peirce said the exemption under consideration would facilitate “limited trading of certain tokenized securities” and is “much narrower” than the “blanket” exemption mentioned in the committee’s draft recommendation.
Her comments suggest the SEC is still open to a controlled tokenization framework, but not to the broader form of relief some market participants may have expected. Rather than endorse the committee’s approach, Peirce asked it to defend several of its assumptions before any wider exemption is considered.
That makes this a meaningful regulatory signal for crypto and tokenization firms. Rather than opening the door to unrestricted onchain securities activity, the SEC appears to be exploring a controlled exemption that allows limited experimentation while keeping investor protections at the center. This is an inference based on Peirce’s description of the exemption as limited and narrower in scope.
Peirce questions disclosure, atomic settlement, and market structure
Peirce first questioned whether existing SEC disclosure rules are actually inadequate for tokenized securities. She asked why current issuer disclosure requirements do not already give investors a clear understanding of ownership rights and whether broker-dealers and clearing agencies that tokenize security entitlements should face new disclosure obligations. She also asked why tokenized security entitlements should be treated differently from those that are not tokenized.
She also challenged the view that atomic settlement of tokenized equity securities would necessarily require exemptive relief or changes to the SEC’s T+1 settlement regime. Peirce asked the committee to clarify why faster-than-T+1 settlement would need relief and whether such transactions would face friction under any other existing SEC rules.
On market structure, Peirce raised questions about how tokenized securities platforms would be regulated if there are no intermediaries, or if participants do not fit neatly within existing Exchange Act categories such as broker, dealer, exchange, or clearing agency. She also asked whether the SEC has the statutory authority to impose the kinds of requirements recommended in such cases.
Peirce further asked whether any innovation exemption should require a third party to obtain issuer consent before issuing tokenized versions of an existing company’s equity securities. She closed that section by asking what conditions would be needed in any exemption to preserve investor protections and limit regulatory arbitrage.
The statement leaves the clearest policy signal in a narrow lane: SEC staff is working on a limited exemption tied to certain tokenized securities, while broader relief remains under scrutiny. For crypto and tokenization firms, that points to a cautious regulatory path rather than a broad green light.
What this means for tokenized securities
Peirce’s remarks suggest the SEC is not rejecting tokenization experiments outright, but it is also not embracing the kind of broad carveout that some market participants may want. The statement points instead to a narrower path: a limited innovation exemption for certain tokenized securities, paired with open skepticism toward wider claims that current disclosure, settlement, and intermediary rules must be substantially reworked.
The reading is based on the contrast in her remarks between the narrow exemption staff is working on and the series of questions she directed at the committee’s broader draft recommendations.
For crypto and tokenization firms, the takeaway is that the SEC conversation is moving forward, but under tighter boundaries than a simple “relief” headline would suggest. Peirce’s statement was less a green light for tokenized securities and more a signal that broader proposals still have to clear major legal and policy questions.
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