SEC Commissioner Hester Peirce said Tuesday that the market will ultimately decide which types of tokenized securities and real-world assets will succeed.
The future of tokenized securities and real-world assets may not be shaped by regulators, but by the market itself.
That is the view of SEC Commissioner Hester Pierce, who told Bloomberg that investors and businesses will ultimately decide which models succeed.
Here’s how that impacts you.
Tokenised Securities Still Under SEC Rules
While tokenization is changing how assets are packaged and traded, Peirce reminded that the rules remain the same.
Tokenized securities are still securities, which means issuers must clearly disclose asset characteristics and comply with the access restrictions.
“It may be a security with different characteristics, and that’s something that needs to be conveyed to investors,” she said.
SEC Won’t Pick Winners
Pierce also highlighted that the SEC is willing to work with people taking different approaches, rather than “picking winners.”
“We’re looking forward to working with folks to try those different models out and see what the markets like,” she added.
Tokenization Gains Traction, But Adoption is Slow
Tokenization is gaining rapid attention from both fintech innovators and Wall Street giants.
The most successful example so far is the stablecoin market, which is projected to hit $2 trillion by 2028. Big companies like BlackRock, Bank of America, and Coinbase are exploring tokenized assets, but outside of stablecoins, growth has been slow.
JP Morgan says that the adoption has been at just $25 billion, and mostly driven by crypto firms, not major banks and publicly-traded companies. However, experts note that new stablecoin laws will provide clearer rules, supporting wider adoption despite concerns over risks and scams.
Crypto Market Structure Bill
Pierce also outlined how the SEC is working with the CFTC on crypto oversight, particularly in implementing the President’s working group recommendations on digital assets.
On transaction fees, Pierce said that they should be paid by those who benefit from them. Even if Congress fails to pass a crypto market structure bill soon, the SEC is not waiting for Congress to act on a market structure bill.
The crypto market structure bill is currently under review in the U.S. Senate and has garnered strong bipartisan support in the House with 78 democratic votes.
“We have a lot of work that we can do under the existing authority that we have, and we think that what we do will be consistent with whatever market structure legislation comes out,” she said.
Project Crypto Moves Forward
According to the Commissioner, Project Crypto, the SEC’s in-house initiative to implement these changes, is also “going very well,” with the task force collaborating across the agency, meeting with industry participants and stakeholders, gathering written comments, and preparing a package of reforms.
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It seems like the vision is clear: innovation will lead, and the market will choose the winners. We’re looking at a new era for crypto.
FAQs
Tokenized assets must disclose: 1) Underlying asset details 2) Redemption mechanisms 3) Smart contract risks 4) Transfer restrictions – just like traditional securities under SEC Rule 144.
Unlike reactive enforcement, Project Crypto proactively engages industry through: 1) Monthly tech sprints 2) Developer office hours 3) Sandbox testing of novel tokenization models before launch.
Major banks are forming consortiums (like JP Morgan’s Tokenized Collateral Network) to standardize: 1) Settlement protocols 2) KYC/AML frameworks 3) Interoperability bridges between TradFi and DeFi.
