Hester Peirce: SEC Ready to Engage on Tokenization, But Cautions on Risks
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce said Tuesday that the regulator is willing to work with industry participants on tokenization, highlighting both its promise and the complexity of integrating tokenized products with traditional markets.
Speaking at the Digital Assets Summit in Singapore, Peirce encouraged innovators to approach the agency early. “We are willing to work with people who want to tokenize, we urge them to come talk to us,” she noted.
Tokenization and Its Challenges
A tokenized security represents ownership or rights in an underlying asset — such as stocks or bonds — on a blockchain. This means the same security can exist as a traditional paper certificate, an electronic record, or a blockchain-based token.
Peirce emphasized the core regulatory challenge: ensuring that different versions of the same asset interact smoothly. “Some of the questions are how does a tokenized security interact with other iterations of the security and other forms of that security,” she said.
She added that depending on the structure, tokenized products could fall under several regulatory categories, requiring a nuanced approach to oversight.
Tokenization Gains Traction
Tokenization has emerged as one of the most practical applications of blockchain technology, alongside stablecoins. Financial institutions globally are using tokenization to enhance market liquidity, transparency, and operational efficiency, creating new pathways for trading and managing assets.
The tokenized asset market is already expanding rapidly. As of Tuesday, $31 billion worth of assets were tokenized on-chain, according to RWA.xyz, including $714 million in tokenized equities.
Tokenized stock market (Source: RWA.xyz)
Long-term growth projections are even more striking. Consulting giant McKinsey estimates the market capitalization of all tokenized assets could reach $2 trillion by 2030, underscoring the potential of this sector to reshape traditional finance.
SEC’s Role in the Future of Tokenization
Peirce’s comments signal a more open stance from the regulator at a time when global regulators are racing to define frameworks for digital assets. While the commissioner acknowledged the regulatory complexities, her remarks reflect a willingness to engage constructively with the industry.
By inviting collaboration, the agency could help shape a future where tokenized products coexist with traditional financial instruments, while addressing investor protection and market integrity concerns.
