US Securities and Exchange Commission Commissioner Hester Peirce has pushed back on expectations that the agency could soon open the door to unrestricted stock trading through proposed “inventory freedoms.”
Summary
- SEC Commissioner Hester Peirce said any exemption for tokenized stock may apply to on-chain versions of existing public shares.
- Artificial stock tokens that track stock prices without shareholder rights are not expected to qualify under the proposed SEC framework.
- Superstate and Securitize industry executives say a smaller approach can reduce the risk of a break-up in strong equity markets.
According to comments made by Peirce to X on Thursday, any proposed exemption would only apply to on-chain versions of existing securities that are already trading on public secondary markets.
He said he always expected the proposal to remain “limited,” adding that it would only help trade “digital representations of the same underlying security that an investor can buy in the secondary market today.”
His clarification came days after Bloomberg reported that the SEC is exploring a conditional exemption framework that would allow certain tokenized securities products to operate with modified regulatory requirements.
Fox Business reporter Eleanor Terrett described Peirce as “lowering expectations” about the proposal and narrowed its focus on “onchain equity products, not artificial tokens that mimic stock without giving investors the same rights as shareholders.”
Peirce’s comments also seem to throw out tokens of a stock-style make-up under the purported exemption. Such products typically track the share price without giving owners the ownership rights associated with the underlying shares.
SEC hearings focus on shareholder rights
As previously reported by crypto.news, SEC officials discussed allowing limited equity only if the tokens retain the same economic and governance rights as traditional shares, including voting rights and dividend access.
People familiar with the matter said the agency gathered feedback from hundreds of market participants while formulating the proposal. The report added that negotiations are ongoing and the final terms may change before any exemption is approved.
Concerns about synthetic stock products emerged soon after the news broke. Brett Redfearn, president of tokenization firm Securitize, warned that allowing third parties to create equity tokens without the involvement of issuers could create fragmentation problems across the market.
Some industry statistics also supported Peirce’s narrow explanation.
Robert Leshner, CEO of token platform Superstate, said at X that limiting token trading to regulated stocks would allow financial markets and tokens to grow “without compromising the values that make the USA a capital markets center.”
Meanwhile, Carlos Domingo, CEO of Securitize, said limiting the exemption to real assets linked to equity would reduce the risk tied to synthetic products.
“This is good, we want to do on-chain trading, but with the right assets, and not to help increase those derivatives that divide the market and introduce additional risks,” said Domingo.
Even with the growing interest from crypto firms and financial institutions, token shares remain in a small corner of the digital assets sector, although they are expected to grow.
Data from RWA.xyz shows that token shares are currently worth about $1.48 billion of on-chain assets. Existing offerings include tokenized exposure tied to companies like Circle, Strategy, and Google.
Total market value of RWA. Source: RWA.xyz
Earlier, it was also reported that some SEC officials remain hesitant about allowing trading of tokenized shares at all, despite ongoing discussions about a possible exemption.
