The Government Lets You Gamble - But Won’t Let You Invest In Crypto | Hester Peirce

Peirce favors targeted blockchain adoption in financial markets rather than treating it as a universal solution: the DTCC’s SEC no-action letter points to modernization and fewer settlement fails, while the SEC’s innovation exemption creates a five-year experiment for permissioned, on-chain trading of tokenized NMS securities. Those tokenized securities must provide the same rights as the underlying shares, and issuers receive a 30-day window to reject certain third-party tokenizations.

Peirce’s preferred regulatory approach is technology-neutral and evidence-driven: regulators should protect investors, preserve market integrity, and support capital formation while allowing markets to test where blockchain improves traditional finance. She argues that durable rules are more likely when products achieve genuine adoption and build constituencies that continue defending them after political leadership changes.

Although Peirce was surprised that the Clarity Act failed, she believes the SEC and CFTC can address unresolved crypto issues under existing authority while a market-structure bill remains desirable. Her proposed framework would permit projects to raise up to $5 million through a startup exemption or up to $75 million through a more intensive exemption, with a safe harbor allowing tokens to separate from their investment contracts and operate as commodities.

Peirce rejects rigid classifications for tokens, equity, and investment contracts: projects could combine or separate token and equity rights if the benefits are clearly defined, and a token might initially comply with securities rules before moving outside that framework as the project evolves. She says an investment-contract component may fall away after promised actions are fulfilled or abandoned, although abandoning those promises can create legal problems.