SEC’s Hester Perse gives “green light” for tokenization

SEC Commissioner Hester Peirce said the market, not the regulator, should decide which tokenization model will be successful. In an interview on August 12, she emphasized that while the SEC is open to dealing with a variety of approaches, tokenized securities are subject to existing law. Pers emphasized that clear disclosure of the nature of tokenized assets is essential, especially when it comes to security with unusual characteristics.

Peirce’s comments are as everyone from major banks to crypto startups are exploring ways to bring real-world assets such as stocks and bonds to the blockchain to improve efficiency and transparency. However, regulatory uncertainty was a major hurdle.

Blockchain security is still security

In a July 9 statement entitled “Not seductive but not magic,” Peirce reaffirmed that blockchain will not change the legal classification of assets. Security issued in tokenized form remains as security under US law. She warned that tokens issued by third parties, such as securities and security-based swap receipts, carry certain legal and investor risks.

Peirce emphasized that issuers and distributors need to meet disclosure obligations and ensure compliance with federal securities regulations. She warned that tokenization cannot be used as a way to bypass legal requirements, adding that investors should receive accurate information about the products they have purchased.

The commissioner also highlighted the SEC’s readiness to work with companies experimenting with symbolization, pointing out that symbolic approaches could promote innovation while maintaining investors’ protection. She advocates for regulatory sandboxes and other ways of engagement to address new technologies.

Balance between innovation and investor protection

Peirce leads the SEC’s Crypto Task Force. This works to modernize agency approaches to digital assets. She said the committee would not wait for new laws addressing encryption and tokenization, instead using existing powers to provide clarity and adapt surveillance.

What about other products? Peirce is embracing innovation elsewhere too. Here is our story about her tips about ether staking ETFs.

The rise of tokenization is due to the US financial system taking into account stable laws and wider blockchain adoption in capital markets. Peirce helps you determine the best model for the market, but she argued that compliance and transparency are essential.

Advocates highlight benefits such as faster payment times and wider market access. Peirce’s stance shows that innovation only progresses within the current legal framework.

Crypto Market Driver. Perth’s comments come as the crypto market is rising. Here is an analysis of the July CPI report and cryptographic impact: