US Securities and Exchange Commission (SEC) Commissioner Hester Pearce said regulators should avoid micro-managing markets and consider simplifying disclosure requirements as the debate over tokenized securities continues.
Pierce, who is often referred to as the “Mother of Crypto” for her generally supportive stance on digital assets, made the statement Thursday while speaking to the SEC’s Investor Advisory Committee, warning that excessive regulations could distort the flow of capital through financial markets.
Citing Adam Smith, the 18th-century economist widely regarded as the father of modern economics, Peirce argued that regulators should exercise restraint when shaping market outcomes.
He said public companies often spend too much time preparing mandatory disclosures, which can obscure rather than clarify information for investors, and suggested the SEC should consider streamlining disclosure rules.
While the speech addressed broader regulatory issues, Pierce also pointed to the growing debate surrounding blockchain-based securities and financial infrastructure.
He noted that SEC staff are continuing to work on a potential “innovative exemption” that could allow for limited testing with securities while regulators evaluate how securities laws apply to blockchain-based markets.
Pierce also questioned whether additional disclosure and intermediary requirements are necessary for securities, noting that blockchain systems can make settlements faster and in some cases without traditional intermediaries.
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Tokenization takes effect at SEC
Tokenized securities have become a growing topic for the SEC. Chairman Paul Atkins said last year that he sees tokenization as a key financial “innovation” that regulators should encourage rather than restrict.
The agency took a step in that direction in December when it issued a no-action letter to the Depository Trust and Clearing Corporation (DTCC) that allowed the market infrastructure provider to explore a blockchain-based securities tokenization service.
The letter effectively indicated that the regulator would not recommend enforcement action if DTCC continues to engage in certain tokenization-related activities, opening the door for the company to develop infrastructure to support traditional blockchain-based securities settlements.
Regulatory discussions about tokenization are also taking place alongside broader policy debates in Washington about crypto market structure legislation that could ultimately shape how digital assets are regulated in the United States.
related to: SEC chairman calls for “coordinated oversight” among US regulators
