US SEC To Consider Potential Tokenization Exemption For Companies

The US Securities and Exchange Commission (SEC) is considering a proposal allowing companies to engage in tokenization by issuing and trading securities using blockchain technology. This consideration follows a recent statement from SEC Commissioner Hester Peirce, who has consistently advocated for clearer, more flexible crypto regulation.

US SEC and the Tokenization Bid

In a recent post on X, Wu Blockchain shared that Commissioner Peirce revealed that the SEC is considering an exemption order for tokenization. This exemption would provide companies with legal cover to use distributed ledger technology (DLT) for issuing, trading, and settling securities.

In a public statement, she emphasized the need for the US SEC to avoid setting rules that stifle innovation. This is particularly important, especially in cases where technology could improve efficiency in capital markets.

According to Peirce, the tokenization exemption could allow the use of trading systems explicitly built for securities. She stressed that current regulations might discourage innovation and argued for a principle-based approach focused on investor protection and long-term value creation, rather than rigid procedural requirements. 

This latest update comes ahead of the incoming roundtable discussion on tokenization, scheduled for next week. The commission intends to gather public input on how blockchain can be integrated into the financial system without risking market integrity.

SEC Concession on Crypto Lawsuits

In recent months, the US SEC has shown signs of softening stance on certain crypto-related legal matters. CoinGape reported that the regulator dropped the Kraken lawsuit with prejudice earlier this year. This means Kraken did not have to admit wrongdoing, pay a penalty, or alter its operations regarding the controversial staking offering.

This shift has become more noticeable as judges have questioned the SEC’s approach to defining digital assets as securities. Meanwhile, this was evident in how the agency handled the XRP lawsuit.

However, a change in direction could show internal recognition that the current legal framework is not fully equipped to address decentralized technologies. Observers say a more flexible attitude could encourage firms to work with the SEC rather than avoid U.S. markets altogether.

Will Concession Spread to Altcoin ETFs?

The question is whether the US SEC will extend this softer approach to significant assets like XRP and Solana, amongst others, on cue for major ETF decisions. For context, the Commission recently delayed its decision on Franklin Templeton’s proposal for a spot XRP ETF.

If the Commission is willing to revisit its classification of digital assets and support trading platforms experimenting with blockchain infrastructure. This could pave the way for new exchange-traded funds (ETFs) based on a broader set of crypto assets.

Meanwhile, Robinhood recently announced plans to offer U.S. stock trading on Solana and Arbitrum. Around the same time, Superstate launched a blockchain-based platform for trading tokenized shares.

These moves show that private firms are already moving forward. As the SEC reconsiders its rules, the industry is paying close attention to what happens next.