The SEC's Path to Clarity: How Hester Peirce's Framework Could Reshape Crypto Trading on NSEs and ATSs

The U.S. Securities and Exchange Commission (SEC) has long been criticized for its opaque and enforcement-driven approach to regulating crypto assets. However, 2025 marks a pivotal shift under Commissioner Hester Peirce's leadership of the SEC's Crypto Task Force. By prioritizing regulatory tailoring and market accessibility, Peirce's framework aims to redefine how crypto trading operates on National Securities Exchanges (NSEs) and Alternative Trading Systems (ATSs), balancing innovation with investor protection. This analysis explores the implications of her approach for market structure, participants, and the broader digital asset ecosystem.

Regulatory Tailoring: A Taxonomy for Clarity

Peirce's framework hinges on a nuanced classification of crypto assets based on their economic properties and functional use. As stated by the SEC's Chair Paul Atkins, the agency is moving toward a "token taxonomy" that distinguishes between securities and non-securities, such as digital commodities, stablecoins, and utility tokens. This approach aligns with the Howey test, which evaluates whether a token constitutes an investment contract. For instance, tokens tied to decentralized systems and not reliant on managerial efforts are increasingly deemed non-securities.

This tailored framework is already materializing through initiatives like Project Crypto, which emphasizes economic substance over rigid labels. The SEC has also introduced no-action letters to reduce enforcement risks for projects meeting investor protection standards, such as custody solutions for institutional investors according to PwC. These measures signal a departure from the previous "wait-and-see" strategy, fostering a more predictable environment for market participants.

Market Accessibility: Expanding Participation

A cornerstone of Peirce's vision is enhancing market accessibility, particularly for retail investors. She has advocated for rethinking the definition of "accredited investors", which traditionally excludes individuals based on wealth or income criteria. By recalibrating these barriers, the SEC aims to democratize access to private markets and alternative investments, a move that could unlock broader capital formation.

For NSEs and ATSs, this means adapting to new compliance obligations while leveraging opportunities. The SEC's recent approval of exchange-traded products (ETPs) holding spot crypto assets-effective September 2025-has already facilitated greater inclusion of digital assets in listed products. Additionally, the agency is exploring temporary exemptions for token offerings, allowing projects to operate without immediate registration if they adhere to investor safeguards as reported by FinTech and Digital Assets. These steps reduce friction for innovators while maintaining market integrity.

Implications for NSEs and ATSs

The evolving regulatory landscape will require NSEs and ATSs to navigate a dual framework: the SEC's oversight of securities and the CFTC's jurisdiction over non-securities. Peirce has proposed a division of responsibilities, with the CFTC managing spot tokens and the SEC focusing on securities. This bifurcation could streamline compliance but may also necessitate cross-agency coordination, as seen in joint roundtables between the SEC and CFTC.

For ATSs, the SEC's focus on secondary market trading is particularly significant. Platforms facilitating both securities and non-securities may need new registration frameworks or adaptations of existing rules under Regulation ATS according to Morgan Lewis. Meanwhile, NSEs could benefit from the SEC's push to harmonize state and federal regulations, as proposed in the House-passed CLARITY Act according to Gibson Dunn. Such efforts aim to reduce fragmentation and create a unified market structure.

Challenges and Opportunities

While Peirce's framework offers clarity, challenges remain. The October 2025 flash crash and the collapse of Stream Finance in November 2025 underscore the need for robust investor protections in tokenized securities markets. SIFMA has warned that broad exemptions for tokenized assets could undermine the stability of U.S. markets. The SEC's emphasis on cybersecurity standards and self-custody for digital assets as highlighted by Phemex reflects its intent to mitigate these risks.

For market participants, the path forward involves adapting to tailored compliance requirements. For example, ATSs may need to implement tailored disclosure frameworks for crypto tokens according to Gibson Dunn, while NSEs could leverage the SEC's safe harbor for blockchain projects to attract innovation as reported by Lexology.

Conclusion

Hester Peirce's regulatory framework represents a paradigm shift for crypto trading in the U.S. By tailoring rules to the unique characteristics of digital assets and prioritizing market accessibility, the SEC is laying the groundwork for a more inclusive and resilient ecosystem. While challenges persist, the agency's collaborative approach-evidenced by public consultations and no-action letters-positions the U.S. to lead global blockchain innovation without compromising investor trust. For NSEs and ATSs, the coming years will test their ability to adapt to this evolving landscape, but the rewards for those who embrace it could be substantial.