Hester Peirce Calls For Simpler Disclosure Rules, Tokenization Experiments

US Securities and Exchange Commission (SEC) Commissioner Hester Peirce said regulators should avoid micromanaging markets and consider simplifying disclosure requirements as discussions around tokenized securities continue.

Peirce, often referred to as “Crypto Mom” for her generally supportive stance toward the digital asset industry, made the remarks Thursday during a speech to the SEC’s Investor Advisory Committee, warning that overly prescriptive rules can distort how capital flows 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.

She said public companies often spend excessive time preparing mandated disclosures that may obscure rather than clarify information for investors, suggesting the SEC should consider streamlining disclosure rules.

Although the speech addressed broader regulatory issues, Peirce also pointed to the growing debate around tokenized securities and blockchain-based financial infrastructure.

She noted that SEC staff continue to work on a potential “innovation exemption” that could allow limited experimentation with tokenized securities while regulators assess how existing securities laws apply to blockchain-based markets.

Peirce also questioned whether additional disclosure and intermediary requirements would be necessary for tokenized securities, noting that blockchain systems could enable faster settlement and, in some cases, transactions without traditional intermediaries.

Related: Can US lawmakers pass crypto market structure before the midterms?

Tokenization gains traction at SEC

Tokenized securities have become an increasingly prominent topic for the SEC. Chair Paul Atkins said last year that he views tokenization as a major financial “innovation” that regulators should encourage rather than constrain.

The agency took a step in that direction in December, when it issued a no-action letter to the Depository Trust & Clearing Corporation (DTCC) allowing the market infrastructure provider to explore a blockchain-based tokenization service for securities.

The letter effectively signaled that the regulator would not recommend enforcement action if DTCC proceeded with certain tokenization-related activities, opening the door for the company to develop infrastructure to support blockchain-based settlement of traditional securities.

The regulatory discussions around tokenization are also unfolding alongside broader policy debates in Washington over crypto market-structure legislation, which could eventually shape how digital assets are overseen in the United States.

Related: SEC chair calls for ‘coordinated oversight‘ between US regulators