- SEC considers exempting blockchain firms from traditional securities registration rules.
- Proposed exemption aims to boost innovation while ensuring investor protection.
- SEC’s shift in stance signals support for blockchain systems in securities trading.
The US Securities and Exchange Commission is reviewing a proposal to allow companies to issue and trade securities using blockchain. The proposed exemption order would let firms use distributed ledger technology without registering under outdated financial rules.
Focus on Efficiency and Market Innovation
SEC Commissioner Hester Peirce recently highlighted the need for more flexible regulations. She pointed to inefficiencies in current rules. These regulations, created before blockchain, may hinder firms testing new systems. The proposed order would allow companies to issue, trade, and settle securities using blockchain infrastructure.
Under the exemption, firms could avoid registering as broker-dealers, exchanges, or clearing agencies. However, companies must still follow anti-fraud rules. They must also meet disclosure and recordkeeping requirements. The exemption would only apply to securities-specific blockchain platforms. These platforms must meet investor protection standards.
Industry Anticipates Tokenization Roundtable
The SEC will host a roundtable next week to collect input from industry participants. The focus of the discussion will be on implementing blockchain into the financial system without destabilizing the market. The agency wants to know how tokenization could enhance utility with investor protection level intact.
The industry has moved ahead despite regulatory uncertainty. Robinhood recently announced plans to support US stock trading on Solana and Arbitrum. Superstate, a blockchain startup, also launched a platform to tokenize and trade equity shares.
Shift in Regulatory Attitude
The SEC’s recent actions suggest a softer approach to crypto oversight. Earlier this year, the agency dropped a lawsuit against Kraken without requiring penalties or admissions of wrongdoing. Judges have also raised questions about the SEC’s classification of digital assets. These developments suggest internal debate on how to regulate decentralized platforms.
In February, the SEC clarified its stance on memecoins. The agency said clearly speculative tokens with no intrinsic value may not qualify as securities. In April, it said stablecoins pegged to the US dollar might also avoid securities classification if marketed solely for payments.
New Leadership Brings Policy Changes
The agency’s shift comes under new leadership. Chair Paul Atkins, sworn in on April 21, replaced Gary Gensler. Under Gensler, the SEC pursued over 100 lawsuits against crypto firms. Now, the agency is narrowing its focus and considering exemptions based on how technologies function in practice.
A pending decision on Franklin Templeton’s spot XRP ETF proposal may indicate how far the shift will go. Observers say the outcome could signal broader regulatory support for tokenized trading systems. The SEC’s move may help keep innovation within US markets instead of pushing firms abroad.
