Key Notes:
- Peirce called for regulations that support innovation without discouraging public listings or raising compliance barriers.
- The SEC may offer conditional exemptions to simplify issuing and trading tokenized securities on blockchain.
- Cross-border cooperation is central to Peirce’s vision for inclusive, tech-forward capital markets.
On May 8, 2025, SEC Commissioner Hester M. Peirce, urged regulators worldwide to strike a better balance between market oversight and innovation.
Speaking at the SEC’s 31st International Institute for Securities Market Growth and Development in Washington, D.C., Peirce proposed a new approach to tokenization and emphasized international regulatory cooperation.
SEC Calls for Smarter Market Oversight
Peirce warned that excessive regulation can smother entrepreneurship, increase costs for consumers, and discourage companies from going public.
She highlighted the steady decline in U.S.-listed firms—from 5,243 in 2004 to 4,862 in 2024—as evidence that current rules may be pushing businesses away from the public markets.
“Much public company regulation takes the form of disclosure requirements… but even disclosure requirements can be costly and distracting to management,” Peirce said, urging regulators to reevaluate whether some rules may be unnecessary, or even harmful.
Rethinking Disclosure and Competition
In her speech, Peirce noted that disclosure rules should focus on what matters to investors and stick to basic principles. She warned that overly detailed requirements can change how companies operate and make it harder for them to hire the right people.
She also emphasized the importance of real competition in keeping markets healthy and resilient. “Without dynamic competition, capital markets cannot effectively serve people,” she said. “A concentrated set of incumbents, comfortably hiding behind regulatory barriers, may contribute to market fragility.”
SEC Plan Would Streamline Tokenized Securities Issuance
Peirce highlighted the SEC’s exploration of an exemptive order aimed at making it easier for firms to issue tokenized securities using distributed ledger technology.
She said that under current rules, companies are hesitant to issue such assets due to high compliance costs and unclear pathways.
The new framework, shaped by feedback from a February 2025 comment request, would lower these barriers by offering conditional exemptions from traditional registration requirements.
By allowing tokenized securities to be issued more efficiently, the proposal could encourage broader adoption of blockchain in capital markets. However, safeguards would still apply, including anti-fraud protections, clear disclosure of platform risks, and requirements for safe crypto custody practices.
Cross-Border Sandboxes for a Shared Future
In addition to her previous proposals, Peirce suggested establishing bilateral regulatory sandboxes, to encourage international financial innovation. These sandboxes would enable concurrent market experiments in different countries.
“We owe it to our respective citizenry to tackle these frictions through cooperative approaches,” she said, advocating for shared regulatory frameworks that reduce inefficiencies and accelerate responsible innovation.
Commissioner Peirce concluded by stressing that the regulatory balancing act must not be a solitary effort. Instead, collaboration among nations is vital to fostering resilient, inclusive, and innovative capital markets worldwide.
Read More: Republicans Push Bill to Regulate Crypto and Clarify Rules
