SEC Commissioner Hester Peirce has called on regulators to ease corporate disclosure rules while encouraging experimentation with tokenized securities through a proposed innovation exemption.

She expressed these views during a speech to the SEC’s Investor Advisory Committee, emphasizing that excessive regulation can hinder capital flow in markets.

With a nod to Adam Smith, Peirce highlighted the importance of regulatory restraint in shaping market dynamics. She stated public companies often waste resources on mandatory disclosures that may confuse investors instead of clarifying crucial information.

As discussions about tokenized securities grow, Peirce’s speech also reflected broader deliberations at the SEC, including ongoing work towards an innovation exemption that might facilitate limited experimentation with these new financial products.

Moreover, she raised questions about whether tokenized securities would require additional disclosures or intermediaries, pointing out that blockchain technology could streamline transactions.

Tokenization Trends at the SEC

The conversation around tokenized securities is gaining momentum at the SEC. Last year, SEC Chair Paul Atkins described tokenization as a significant financial innovation deserving encouragement.

In December, the SEC issued a no-action letter to the Depository Trust & Clearing Corporation (DTCC), enabling it to pursue a blockchain-based service for tokenizing securities without fear of regulatory reprisals, thus paving the way for blockchain-supported settlement of traditional securities.

These discussions on tokenization intersect with broader regulatory legislative issues in Washington, which could redefine how digital assets are governed in the U.S.