SEC’s Hester Peirce encourages firms exploring tokenization to ‘come in and talk to us’

SEC Commissioner Hester Peirce said regulators are open to working with asset managers exploring new exchange-traded product structures and tokenized financial instruments, as firms push to bring blockchain-based assets into traditional markets.

Speaking in an interview with CNBC’s The Exchange on Monday, Peirce said the agency wants companies experimenting with new financial products, including tokenized instruments, to engage directly with regulators as the market matures.

"It really is a 'come in and talk to us' about what you're trying to do," Peirce said. "We want to work with you toward being able to experiment to see whether the market wants your products."

Her comments come as asset managers continue exploring ways to package crypto-linked assets and blockchain-based securities inside traditional investment vehicles such as exchange-traded funds.

Leverage scrutiny

Peirce also addressed the SEC’s recent scrutiny of highly leveraged exchange-traded funds, noting that while the agency does not evaluate whether products are inherently good or bad investments, it must ensure they comply with statutory limits and disclosure requirements.

Existing rules impose certain leverage constraints on funds, though sponsors may propose products that exceed typical thresholds if they can demonstrate how the structure fits within securities laws, she said.

"It’s not our job to say which products are good or bad," Peirce said. "It is our job to work with sponsors to make sure that they're disclosing what those products are and what the risks are."

Leveraged ETFs have drawn growing attention from regulators as issuers test structures that go beyond the triple-leveraged funds already being offered by firms like ProShares.

Tokenization momentum

Peirce said firms have approached the SEC more frequently about tokenization initiatives as attitudes toward blockchain technology have shifted in recent years.

"People have come to us and said we really think tokenization has potential here," she said.

The comments follow Peirce’s remarks last week that SEC staff are working on a “narrower” innovation exemption designed to facilitate limited trading of certain tokenized securities while preserving investor protections.

That proposal, discussed during a meeting of the SEC's Investor Advisory Committee, would allow targeted experimentation with tokenized securities under existing regulatory frameworks rather than creating a broad exemption from securities rules.

Industry advocates have argued that tokenized assets could improve market infrastructure through faster settlement, reduced intermediaries, and real-time ownership tracking, though regulators have stressed the need to maintain traditional disclosure and oversight standards.

Peirce said the SEC expects legal, operational, and technical questions to emerge as firms test these models, but indicated the agency wants to engage with the industry as those issues are worked through.

"We want to walk side by side with you as we think through those questions," she said.