SEC Considers Exemptions for Blockchain Securities Issuance

The US Securities and Exchange Commission (SEC) is contemplating rule changes that would facilitate the issuance of tokenized securities by companies. SEC Commissioner Hester Peirce announced this development in a speech published on May 8. The proposed changes aim to exempt firms using blockchain technology from certain registration requirements when issuing, trading, and settling securities. This move could potentially exempt decentralized exchanges (DEXs) from registering as broker-dealers, clearing agencies, or exchanges, a requirement that has led to numerous charges against DEXs like Uniswap in the past.

Peirce emphasized that firms should not be burdened with regulations that are outdated and incompatible with the technologies they are using. She noted that while companies would still need to comply with rules designed to prevent fraud and market manipulation, they may also need to meet certain disclosure and recordkeeping requirements. This shift in policy reflects a broader change in the SEC's approach to cryptocurrency oversight since the current administration took office.

Under the leadership of former SEC Chair Gary Gensler, the agency had brought over 100 lawsuits against crypto firms for alleged securities law violations. However, with the appointment of Paul Atkins as chair on April 21, the SEC has adopted a more nuanced stance. In February, the SEC issued guidance stating that memecoins, if clearly identified as purely speculative assets with no intrinsic value, do not qualify as investment contracts under US law. Similarly, in April, the regulator clarified that stablecoins, digital tokens pegged to the US dollar, do not qualify as securities if marketed solely as a means of making payments.

These policy changes indicate a significant shift in the SEC's approach to regulating cryptocurrencies and tokenized securities. By considering exemptive orders for firms using blockchain technology, the SEC aims to foster innovation while maintaining regulatory oversight. This move could pave the way for more companies to explore the potential of tokenized securities, potentially leading to increased adoption and development in the blockchain and cryptocurrency sectors.