About Hester Peirce
SEC Commissioner Hester Peirce has continued to advocate for clear regulatory frameworks for digital assets and tokenized securities. In recent appearances, she discussed the SEC's work on an "innovation exemption" for tokenized securities, which she described as "not even that big of a step" and "pretty traditional," clarifying that it would not cover synthetic securities held through special purpose vehicles. She also emphasized that the SEC and CFTC are conducting joint work to determine where products should be regulated, and that the SEC is preparing for potential rule-writing obligations if the CLARITY Act passes, which she said she expects to happen "this summer." Peirce noted that her term ended in June 2025 but she can remain until the end of 2026, and that she plans to leave before that time to teach securities regulation at a law school.
Peirce stated that she is "not looking for ways to pull people into the regulatory regime that don't belong" and cautioned that "some of what's out there at least rhymes with what we see in some securities type arrangements," urging market participants to assess whether securities laws apply to their activities. She identified priorities including enabling token fundraising, updating transfer agent rules, and addressing custody issues. Peirce also stressed the importance of protecting self-custody, privacy in financial transactions, and developers' ability to write code without permission, while noting that the SEC continues to pursue enforcement against bad conduct. She encouraged builders to "build things that meet actual human needs" and to "come in and talk to us" about registration or relief.
Source: AI-verified profile updated from Hester Peirce's recent appearances.
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Transcript (4 segments)
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Interviewer0:00
What your priorities are for the remainder of the year? You know, of course, these two pieces, innovation exemption and 611, are tremendous and I think certainly move us further in the right direction. But what are your main priorities when it comes to the crypto task force and ultimately delivering greater regulatory clarity for digital assets?
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Hester Peirce0:23
Well, so one thing that I think will affect where the commission goes is whether clarity passes because as I said, clarity does give us quite a few regulatory obligations and rule writing obligations. And so, that's something that we're watching and we're trying to prepare for what that will look like if that passes, how we'll go about coordinating that work because that will be a big coordination job. That's one piece. The next thing is we have talked about the innovation exemption. That is one thing I'd like to see get done, but another thing that I have talked about for a long time is the ability to use tokens in fundraising and in raising capital. And so, what does that look like? And we have been doing some work on that. So that's also a priority. And then we are dealing with the nuts and bolts issues around transfer agents, interaction between transfer agents and blockchain, custody of crypto assets both on the investment adviser side and on the broker-dealer side, clearing agencies, what does that look like? We have the staff green lighted the DTCC to do some experimentation here, got a no action letter. So there are a lot of things like that. And then we're thinking longer term about definitions of things like brokers. We put the staff put out a statement around user interfaces. That's a temporary statement with the idea that the staff needed some time to think about how the broker-dealer regulation interacts with this area. So, I think that's something else that we're spending time thinking about. Vaults are another issue that I think deserves some attention from the agency and we're thinking about as well. And urging people to come in and talk to us because there are some potential areas there where activities could implicate the securities laws and people need to be careful there. So, those are some of the thoughts. Now, I should say that my term ended last June. I can stay until the end of the year unless someone else gets put into this spot, but I will be leaving before that time. And so, my time here is short and I am very enthusiastic that the commission will continue to do good work in this area. And so, I will not be here for most of that work. Now, I should say too, it's not just the SEC, it's the CFTC. We're doing a lot of joint work with them. The CFTC has been very busy on many fronts. But one of the areas that we've been working with them on is coordinating around where do products sit, where should they be regulated? What does it look like for an entity to trade or to make available to its customers products that may fit within the SEC's jurisdiction and the CFTC's jurisdiction. So, thinking about those kinds of issues will also be a big focus.
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Interviewer3:47
Certainly. And this is part of the foundation that you lay for the following commissioners that come after, as well as the definitions and taxonomy that you talk about leaves not only a legacy but also clear rules of the road that will serve as the interpretation for the following regulators. And so, we talked about the Clarity Act and how this is going to be sort of this lasting piece that is going to affect things. There's also the innovation exemption, and so in addition to the rules that we've talked about today, I'm curious, are there criteria or processes that you've seen companies or entities take now that you think are the way things should be done? What in general can these entities take into account that will serve as the building blocks going into the future? For instance, you mentioned the DTCC got this no action letter. Obviously they are a very prominent entity in this entire industry. Is there any general criteria or processes that you would recommend as we move forward that you anticipate will become sustainable in the regulation moving forward?
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Hester Peirce5:09
I mean the biggest thing I would recommend is think about what you're trying to do, what you need to do to make that commercially viable, and then what kind of regulatory relief you need. But this is a very complicated legal area and people really need to be thinking about: do I need to come in and register this product? Do I need to ask for no action relief from something? Might I be pulled into the definition of broker dealer, investment adviser, investment company? Don't panic if that's the case. Come in and talk to us and we can think about what makes sense in terms of what would it look like for you to register your product or what, you know, are there any requirements that don't make sense because we have information on the blockchain that maybe replicates information that would otherwise be generated through a regulatory requirement. So, I think really best practices are get good... I hate to tell people that they have to go talk to lawyers, but go talk to a good lawyer who specializes in this area. And then we, the crypto task force, but more generally the staff at the SEC is very eager to engage. And I think we can make some good progress. It's only by people being willing to come in and say, 'Hey, this is what I'm trying to do. I think we need some relief here.' That we can move things forward.
