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SEC’s ‘Crypto Mom’ affirms tokenized securities remain subject to regulations

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Hester Peirce, a Republican commissioner of the U.S. Securities and Exchange Commission (SEC) known as “crypto mom” for her supportive views on cryptocurrencies, emphasized on Wednesday that tokenized securities must comply with existing securities regulations.

Peirce stated, “As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset. Tokenized securities are still securities.” Tokenization refers to converting traditional shares into digital tokens traded on blockchain platforms. Investors holding these tokens own a representation of the underlying securities.

She warned that tokens issued by third parties, rather than the original security issuers, carry distinct risks for investors.

The concept of tokenized securities is gaining traction in the crypto and finance industries as a potential way to innovate trading processes. Coinbase recently revealed it is seeking SEC approval to offer blockchain-based stock trading.

SEC Chairman Paul Atkins, also a Republican, voiced support for fostering innovation but stressed regulatory oversight remains important. Critics argue that tokenization could be exploited to bypass SEC rules, putting retail investors at risk.

Interim SEC Chief Casts Sole Vote Against Suing Musk Over Late Twitter Disclosure

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In January, just before Republicans took control of the U.S. Securities and Exchange Commission (SEC), the agency held a closed-door vote on whether to sue Elon Musk for securities law violations related to his late disclosure of purchasing shares in Twitter (now X). According to sources familiar with the vote, four of the five commissioners, including Republican Hester Peirce, voted in favor of suing Musk, while the acting SEC chief, Republican Mark Uyeda, cast the lone dissenting vote.

This vote occurred just days before the SEC filed a lawsuit against Musk on January 14, alleging that he had violated disclosure rules by failing to report his purchase of more than 5% of Twitter’s shares within the required 10-day window. Musk’s late disclosure, which came 21 days after the purchase, allegedly allowed him to acquire more shares at a lower price, saving $150 million on his eventual acquisition of the company.

Uyeda reportedly expressed concerns over the penalty Musk faced and pressed SEC enforcement staff to confirm that politics were not influencing the case, asking them to sign pledges to that effect, which the staff refused. Despite Uyeda’s concerns, Peirce joined the three Democratic commissioners in voting to proceed with the lawsuit.

The SEC’s investigation into Musk, which began in 2022, focused not only on the timing of his disclosure but also whether he had acted with any intent to manipulate the stock price. Musk has maintained that the delay was due to a misunderstanding of the SEC’s rules. The SEC ultimately did not pursue charges alleging intent.

The delay in bringing the case has raised questions among legal experts, who have questioned why the SEC waited so long to act, particularly given the politically charged nature of the case. Musk has had a longstanding feud with the SEC, dating back to 2018 when the agency sued him for misleading investors in a tweet about taking Tesla private.

Musk has until April 4 to respond to the SEC’s summons in this case.

US SEC Crypto Task Force Holds First Roundtable Amid Trump’s Push for Regulatory Overhaul

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The U.S. Securities and Exchange Commission (SEC) crypto task force convened its first public meeting on Friday, focusing on how existing securities laws might be applied to the rapidly evolving digital asset market. The session is part of a broader push to establish clearer guidelines as the Trump administration looks to reshape the U.S. regulatory landscape for cryptocurrency.

Key figures at the roundtable included John Reed Stark, former head of the SEC’s Office of Internet Enforcement, Miles Jennings, general counsel for a16z crypto, and former SEC Commissioner Troy Paredes. Leading the task force is Republican SEC Commissioner Hester Peirce, who emphasized that the meeting marked a “new beginning” in the commission’s approach to crypto regulation.

The crypto industry has long contended with the SEC over how digital assets should be classified under federal securities laws. Many within the sector argue that tokens should be treated as commodities, not securities, which would exempt them from the SEC’s registration and disclosure requirements.

Trump, who campaigned as a “crypto president,” has pledged to reverse the regulatory crackdown initiated under the Biden administration. This includes withdrawing or pausing several legal cases against crypto companies like Coinbase and Kraken. The task force discussed the potential need for a distinct regulatory framework tailored specifically to digital assets, rather than applying traditional securities laws.

While some, like Jennings, advocated for a “technology-neutral” approach, others, such as Democratic SEC Commissioner Caroline Crenshaw, expressed concern over loosening regulations for cryptocurrencies. Crenshaw warned that creating a separate regulatory regime could weaken protections and harm broader market stability.

This meeting is part of Trump’s broader effort to overhaul U.S. cryptocurrency policies, including his recent executive order to establish a strategic reserve of digital assets and a summit for industry leaders at the White House.