SEC's big swing to clear tokenization path isn't likely to get resilience of full rule
Key takeaways
- Securities and Exchange Commission is likely to use a mid-level authority to pursue a tokenization policy.
- "It doesn't have to be done as a rulemaking," said SEC Commissioner Hester Peirce, who has led much of the agency's crypto work since the start of last year.
- CoinDesk canvassed the views of several lawyers who are former officials at the SEC, asking questions about the choice to put off formal rulemaking, and whether the interim work on this will hold up.
Securities and Exchange Commission is likely to use a mid-level authority to pursue a tokenization policy. (Jesse Hamilton/Coin Desk)Summary Show The U.S. Securities and Exchange Commission's forthcoming "innovation exemption" for tokenization isn't expected to rate at the top of the agency's hierarchy of policy durability, despite the crypto sector's years-long wait to get U.S. rules set in stone.Former SEC lawyers say the agency's power to exempt activity from securities laws would still be difficult to reverse, though agency leaders have said this initial policy will be narrow and time-limited.The U.S. Securities and Exchange Commission is preparing one of the most consequential of Chairman Paul Atkins' crypto policies, a new approach that grants some regulatory leeway to those seeking to tokenize securities, such as company stocks. But it's not yet what the crypto sector has asked for: permanent policy it can rely on, which still may be a long way off.
The SEC has an option to pursue formal tokenization rulemaking — the closest it can get to carving something in stone, with a process that involves multiple rounds of public comment and revisions that incorporate that feedback. But the agency instead signaled it's working on exercising its standing authority to exempt businesses from securities laws, planning to temporarily grant abilities to put assets onto blockchains as a proving ground to test potential financial innovations.
"It doesn't have to be done as a rulemaking," said SEC Commissioner Hester Peirce, who has led much of the agency's crypto work since the start of last year. In response to a question from CoinDesk, she said the SEC has exemptive authority that it routinely uses. "We can do it as a rule, but we don't have to do it as a rule."