SEC's Hester Peirce Proposes Limited Innovation Exemption for Tokenized Securities

U.S. Securities and Exchange Commission Commissioner Hester M. Peirce has outlined an "innovation exemption" initiative for tokenized securities that would allow restricted trading and technology pilots in certain tokenized instruments, ChainCatcher reports. Peirce noted the approach is more conservative than the industry's concept of a "full exemption" and proposed examining which tokenization models for different classes of securities could fit within the innovation exemption, including whether third parties should need issuer consent before creating tokenized versions of existing shares. She said the SEC is assessing issues such as whether current disclosure rules adequately capture tokenized ownership structures, the disclosure duties of brokers and clearing agencies involved in tokenized issuance, the consistency of atomic settlement with the T+1 settlement cycle, and how supervisory powers apply in settings without intermediaries or with new types of intermediaries.