SEC Explores Tokenized Securities Innovation Exemption

The U.S. Securities and Exchange Commission (SEC) is considering an 'innovation exemption' for tokenized securities, according to Odaily. Commissioner Hester M. Peirce has indicated that this exemption would allow limited trading and technical experimentation with tokenized securities, adopting a more cautious approach than the industry's proposed 'comprehensive exemption.' Peirce suggests exploring whether different types of tokenization models should be tested within this framework and whether issuers should consent to third parties tokenizing their stocks. This approach aims to foster technological innovation while preventing regulatory arbitrage and maintaining core investor protection mechanisms. Peirce also emphasized that regulators should not excessively interfere with private capital allocation. The SEC is currently evaluating several key issues, including whether existing disclosure systems adequately cover the ownership structures of tokenized securities, the disclosure obligations of brokers and clearing agencies in tokenized securities issuance, the compatibility of atomic settlement with current T+1 settlement rules, and the applicability of regulatory authority in non-intermediated or novel intermediary structures.