The long-awaited US Securities and Exchange Commission rule that begins to allow the tokenization of securities — a change that could have profound effects on financial markets — has faced the contentious view that it will allow synthetic tokens, but a commissioner has taken the unusual step of posting opinions on the unpublished rule to potentially counter those views.
SEC Commissioner Hester Peirce, who had been pushing for safe harbors for tokenization well before the arrival of the new chairman under President Donald Trump, issued a pair of statements on social media X on Thursday and Friday to clarify what she expects from the soon-to-appear rule. Her submission suggested that the proposed rule would not pave the way for synthetic tokenized securities — third-party tokenization that refers to a security but does not carry the equity, voting rights and other rights associated with the security.
Peirce, the commissioner behind the SEC’s Crypto Task Force, wrote that she expects the upcoming rule would be “limited in scope and would only facilitate trading in digital representations of the same underlying equity security that an investor could buy in the secondary market today, not synthetics.”
Peirce posted again to explain what she meant by synthetic, asking people to read the SEC’s January statement on tokenized securities, “which distinguishes tokenized versions of issuer-sponsored stocks and of stocks that SEC-registered companies hold for their clients from synthetic instruments that provide exposure to stocks.”
The flames had been fanned by Bloomberg News reporting this week predicting that the agency is leaning toward including a path to synthetic tokens tradable on decentralized crypto platforms. Peirce said she appreciates the public interest in the rule “but not excessive” about it.
Peirce did not return a request for comment on her post.
The consequential rule will represent the most meaningful step the SEC has taken to date to create a new regulatory approach to crypto trading in the U.S. Chairman Paul Atkins has said for months that his agency is ready to release the sweeping proposals to provide regulatory relief in the crypto space.
He outlined some of the efforts in a speech in March at the DC Blockchain Summit, saying the agency was considering safe harbors from certain regulatory requirements for various crypto activities, including giving startups something like a four-year registration exemption “giving developers a regulatory runway under which to work toward maturity”; a “fundraising exemption” for certain cryptoassets where “entrepreneurs could raise up to a defined amount (eg $75 million) during a 12-month period”; and an “investment contract safe harbor” to prevent certain cryptoassets from being defined as a regulated security, where the safe harbor is triggered when the issuer completes all their management efforts.
Atkins said at the time that Commissioner Peirce’s “fingerprints are all over” the SEC’s rulemaking.
While the SEC — along with its sister agency, the Commodity Futures Trading Commission — has been writing crypto rules, Atkins and CFTC Chairman Mike Selig have said they are doing so with the understanding that Congress is right behind them with the Digital Asset Market Clarity Act to put some of the same ideas into permanent law.
“Only Congress can ensure that regulation in this area is future-proofed through comprehensive market structure legislation,” Atkins said in March.
