SEC Commissioner Hester Peirce Announces Conditional Exemption Framework, Balancing Investor Protection and Promoting Distributed Technology Applications.
SEC Commissioner Hester Peirce has announced a new legal framework proposal for encrypted securities in Washington D.C. on May 8, 2025. The proposal includes a conditional exemption mechanism for certain registration regulations, allowing businesses to test blockchain technology in the issuance, trading, and settlement of securities in a controlled environment.
"We need a reasonable and practical legal system to maintain the global competitiveness of the US Capital market," Peirce emphasized. She cited the continuous decline in public companies over the past 20 years as a reason to adjust disclosure requirements, warning that overly rigid regulations could hinder business growth.
Conditional Exemption with Strict Protective Measures
The SEC's crypto task force is considering a temporary exemption from certain registration regulations, though exempted entities must still comply with anti-fraud measures, disclosure requirements, and financial safety standards.
"This exemption will be conditional. Participating organizations must meet criteria ensuring market integrity, aimed at preventing fraud and manipulation," Peirce affirmed.
Additional conditions include providing comprehensive and clear information to users about the platform's products, services, operations, conflicts of interest, and risks. Compliance with record-keeping and periodic reporting obligations. Accepting oversight and examination by SEC personnel. And maintaining sufficient financial resources to ensure operations.
The proposed framework is built on a "regulatory sandbox" model – where innovative organizations operate in the real market but under specific regulatory supervision. Commissioner Peirce suggests that exemption conditions will include mandatory risk disclosure, operational transparency, and trading volume limits to minimize investor risks.
International Cooperation and Broader Market Benefits
Peirce suggests that cooperation between international regulatory agencies could facilitate multi-market business access, though this requires closer coordination between parties. This model has been successfully applied in many countries, creating conditions for technological innovation within a legal framework.
The SEC will collect public and business feedback before finalizing the regulation, committed to flexible adjustment according to the maturity of the encrypted securities market.
Concluding her speech, Commissioner Peirce emphasized that a dynamic legal mechanism – – supporting innovation while controlling innovation but still controlling risks – risks – is crucial for the Capital market to continue serving broader economic goals. This proposal aligns with the market oversight reform direction the SEC is pursuing under the new Chairman, while meeting expectations from the financial industry for legal framework. excellent Human translation looks accurate and professional. Would you like me to verify any specific part of the translation?
