- Peirce says tokenization must follow existing U.S. securities laws.
- SEC open to innovation but demands compliance and transparency always.
- Market, not regulators, should determine which tokenization models succeed.
According to SEC Commissioner Hester Peirce, the market should ultimately determine which tokenization approaches succeed, not regulators. She stated that the agency is still open to collaborating with other models, but emphasized that tokenized securities should adhere to the laws that exist.
Hester Peirce pointed out the significance of transparent disclosure, particularly in situations where a tokenized asset comprises a peculiar security. Peirce’s remarks come as leading banks and crypto startups seek to find methods of moving traditional investments such as stocks and bonds into blockchain networks to enhance efficiency and transparency.
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SEC Maintains Existing Rules for Tokenized Securities
Peirce reaffirmed in a July statement that blockchain technology does not alter the legal classification of assets. A tokenized security is a security under U.S. law, and she cautioned further that security-based swaps and securities tokens have certain legal and investor risks.
She clarified that issuers and distributors must disclose and comply with federal securities regulations. In her view, tokenization should not be employed to avoid legal duties, and investors should be provided with proper information regarding the products they buy.
Balancing Innovation With Investor Protection
The commissioner leads the SEC’s Crypto Task Force, which focuses on updating the agency’s approach to digital assets. She observed that the commission will invoke its current powers to deal with tokenization before new laws are put in place. Peirce has advocated the use of regulatory sandboxes and other engagement mechanisms to ensure innovation without risking investors.
Peirce pointed out that the SEC is ready to cooperate with companies experimenting with tokenization. Nevertheless, she held that compliance and transparency continue to be critical to market integrity.
Growing Industry Interest in Tokenization
The push for tokenization comes as the U.S. considers rules for stablecoins and broader blockchain adoption in financial markets. Proponents point to faster settlement times and wider market access as potential benefits.
Peirce’s remarks suggest that innovation in tokenization will proceed, but always within the boundaries of current securities laws.
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