During her keynote address in Washington D.C. on May 8, 2025, U.S. Securities and Exchange Commission (SEC) official Hester Peirce outlined a proposed regulatory exemption framework for the trading of crypto-linked securities, aiming to strike a balance between safeguarding investors and encouraging technological advancement.
SEC Considers Regulatory Sandbox for Tokenized Securities as Industry Advocacy Grows
Commissioner Hester Peirce stressed the importance of “sensible regulation” as essential to preserving the global competitiveness of U.S. capital markets. She cited a 20-year decline in public company listings as a key reason to reassess existing disclosure requirements. Peirce warned that overly strict regulations could hinder business growth and deter companies from going public, while appropriately scaled rules for smaller firms could promote greater market competition.
At the core of her address, Commissioner Peirce proposed an exemptive order that would allow companies to trial tokenized securities—traditional assets like stocks digitized on the blockchain—within regulated environments. The SEC’s Crypto Task Force is considering offering temporary relief from certain registration requirements, enabling firms to explore distributed ledger technology (DLT) for issuing, trading, and settling securities.
Entities that receive exemptions must comply with anti-fraud protocols, disclosure obligations, and financial protection requirements. “The proposed exemption would be conditional in nature. Entities receiving such exemptions would be expected to meet market integrity standards designed to prevent fraud and manipulation,” said Commissioner Peirce during the SEC’s 31st International Institute for Securities Market Growth and Development.
Additional conditions might include requirements to provide material and relevant disclosures to users about a platform’s products, services, operations, conflicts of interest, and risks, including smart contract risks; comply with recordkeeping and reporting requirements; be subject to monitoring and examination by SEC staff; and have adequate financial resources for operations.
Peirce added:
The framework models itself after international “regulatory sandboxes,” allowing innovators to operate in active markets under tailored supervisory conditions. Peirce proposed that cross-border cooperation might simplify market access for companies operating across various jurisdictions, though such collaboration would necessitate strengthened coordination among regulators.
The conditions tied to exemption would require the inclusion of risk disclosures, clear operational transparency, and limits on trading volume to reduce investor exposure. The SEC plans to collect feedback before finalizing the rules and may adjust them over time as the market for tokenized securities evolves.
 official Hester Peirce outlined a proposed regulatory exemption framework for the trading of crypto-linked securities, aiming to strike a balance between safeguarding investors and encouraging technological advancement.){kind=link}