SEC Commissioner Hester Peirce speaks out: Tokenization has become a new focus of regulation, and the government shutdown has stalled updates to privacy and financial rules.

Hester Peirce, a commissioner of the SEC, recently emphasized at the DC Privacy Summit that tokenization has become an important area of focus for the SEC, as traditional financial institutions are seeking to bring securities and other assets onto the blockchain. She also expressed concerns about financial privacy in the digital age, suggesting that the peer-to-peer nature of crypto assets necessitates a rethinking of existing regulatory frameworks such as the Bank Secrecy Act, AML, and KYC. However, Peirce pointed out that due to the ongoing government shutdown in the United States, several regulatory efforts, including the approval of crypto ETFs, have come to a standstill.

SEC Focuses on Tokenization Trends: Traditional Assets on the Blockchain Face Regulatory Challenges

Commissioner Pierce elaborated at the summit on the SEC's high level of concern regarding the emerging trend of tokenization. Tokenization is the process of digitizing traditional assets such as securities and transferring them onto a blockchain platform, which is currently being widely favored by financial institutions.

· Institutions like Nasdaq are actively seeking approval for tokenized securities: Pierce mentioned that companies like Nasdaq have submitted requests to the SEC for the approval of tokenized securities trading, indicating that tokenized securities have become an important area of interest.

· Regulatory work hindered by government shutdown: Although the SEC is working hard to establish rules for token distribution and related transactions, Peirce stated that the ongoing government shutdown has hindered the progress of these efforts, leading to multiple approval processes, including those for Crypto ETFs, being in a “paused” state. She admitted that the shutdown has made it difficult for the SEC to advance these important issues.

Follow Financial Privacy in the Digital Age: Crypto Assets Drive Rule Reflection

Commissioner Pierce took this opportunity to express her concerns about financial privacy and linked it to the growth of Crypto Assets.

· Emphasizing personal privacy protection: Pierce cites the Fourth Amendment of the U.S. Constitution, highlighting the importance of protecting personal privacy from unreasonable government searches. She believes that, with the ongoing development of digital finance and crypto assets, the government should not have unrestricted access to personal financial data.

· Beware of government power abuse: She warned, “We have seen in many places that government power can be used in bad ways.” Pearce supports protecting financial privacy in the Crypto Assets space, as transactions in this field are often decentralized and pseudonymous, effectively countering overregulation.

Call to Reassess the TradFi Regulatory Framework

Pierce believes that the rise of crypto assets provides regulators with an opportunity to reflect on the existing financial regulatory framework.

· Conflicts between current regulations and peer-to-peer elements: She specifically mentioned the Bank Secrecy Act, designed for the traditional financial system, as well as anti-money laundering (AML) and know your customer (KYC) rules.

· Questioning the applicability of the existing framework: Pierce asked, “How can you impose the Bank Secrecy Act, AML, and KYC frameworks on something with such strong peer-to-peer elements?” She expressed doubts about the applicability of these rules in the digital asset environment.

· Optimistic expectations for challenges will drive change: Pierce expressed optimism, believing that these challenges can prompt a rethinking of the regulatory structure to better accommodate Crypto Assets and other emerging financial technologies.

Conclusion

The views of SEC commissioner Hester Peirce reflect that regulators are trying to strike a balance between promoting financial innovation and maintaining personal privacy and market integrity. Her focus on tokenization and financial privacy signals that these will be core issues in the future of U.S. crypto regulation. However, the current government shutdown has stalled all substantive progress, leaving the future of crypto ETFs and tokenized assets in uncertainty. Once the government resumes operations, the SEC must act quickly to adapt to this rapidly changing digital asset world.

This article is for news information and does not constitute any investment advice. The crypto market is highly volatile, and investors should make decisions with caution.