Peirce's 6 Questions Tell You Exactly Where the SEC's Tokenization Sandbox Is Headed
Commissioner Peirce confirms the SEC is building an innovation exemption for tokenized securities. Her 6 questions to the Investor Advisory Committee map the boundaries.
On March 12, 2026, SEC Commissioner Hester Peirce addressed the Investor Advisory Committee and confirmed that Commission staff is actively building an "innovation exemption to facilitate limited trading of certain tokenized securities." She called it "much narrower" than what the IAC draft had proposed.
6 questions. That's what she put to the Committee. And if you know how to read regulatory signal, those 6 questions are a roadmap.
Have questions about what this means for your securities? Visit Vertalo.ai and ask our chatbot. It's trained on every SEC statement, FAQ, and regulatory development in the tokenization space.
I've been building tokenization infrastructure for 8 years. I watched the Jan 28, 2026 SEC Joint Statement on Securities Tokenization confirm that tokenized securities on DLT are legal. That was the "is it legal?" question, and the answer was yes. Peirce's March 12 remarks shift the conversation entirely. We're now in "how do we build the sandbox?" territory.
Personally, 8 years after we (Vertalo) issued our own Tokenized Reg D/S Vertalo Talos Equity, I’m kind of past the Sandbox phase, but sounds good to me versus the quicksand that was the Gensler SEC!
And I am ecstatic that we are not a Broker-Dealer. Read down to understand why.
Commissioner Peirces 6 Questions - Unwrapped
1. Are existing disclosure requirements already sufficient? The IAC draft called for mandatory disclosures giving tokenized security investors a clear picture of ownership rights. Peirce asked: what exactly is missing from the SEC's existing issuer disclosure framework?
If you can't answer that, maybe nothing's missing.
2. Do broker-dealers and clearing agencies need new disclosure rules when they tokenize security entitlements? She asked why tokenized entitlements should be treated differently than non-tokenized ones.
The implied answer: they probably shouldn't be.
3. Why would atomic settlement need exemptive relief from T+1? This is one of the 2 most important questions. The IAC draft said atomic settlement requires relief from T+1 rules. Peirce's response: atomic settlement is faster than T+1.
Why would you need a waiver to settle faster? She also asked whether atomic settlement would face friction under other existing SEC rules beyond T+1.
4. What happens when there are no intermediaries? This is the other most important question. The IAC assumed tokenized equity trading would have intermediaries subject to best-execution protections. Peirce asked what happens when there are no intermediaries, or when the intermediaries don't fit existing Exchange Act definitions (broker, dealer, exchange, clearing agency).
Does the SEC even have statutory authority to regulate those entities? That question cuts deep.
5. Should the exemption allow multiple tokenization models? The Jan 28 statement identified 5 distinct tokenization models. Peirce asked whether the innovation exemption should allow different models to coexist so the SEC can learn about each one's risks and benefits.
She also asked whether issuers should have to consent before someone creates a tokenized version of their existing securities.
6. What guardrails prevent regulatory arbitrage? Standard caution, but real. What conditions preserve fundamental investor protections without creating a regime so narrow it teaches us nothing?
What Narrowed, What Broadened, What Got Clarified
Narrowed: The exemption itself. The IAC draft floated a blanket exemption. Peirce walked that back immediately. "Much narrower" means targeted, limited, and probably scoped to specific security types or transaction structures.
Broadened: The analytical frame. Questions 3 and 4 open up existential questions about whether traditional market structure even applies to DLT-native settlement. That's a much bigger intellectual space than the IAC was working in.
Clarified: The disclosure burden on issuers. Questions 1 and 2 strongly suggest existing rules may already be sufficient. Issuers don't appear to be facing a new disclosure regime on top of what they already file.
What to Do Right Now, by Audience
Issuers: The exemption is coming. Start the tokenization conversation with your transfer agent now. Based on Questions 1 and 2, existing disclosure requirements likely apply, which means your compliance overhead may be lower than you think. Early movers set the terms.
Investors: The SEC's questions confirm it's building equivalent protections for tokenized securities, not a separate weaker regime. Question 6 is the guardrails question, and Peirce is asking it seriously.
Transfer Agents: Commissioner Uyeda told you on Feb 9 to modernize via DLT. Peirce's Question 5 means the SEC wants platforms that can handle multiple tokenization models. Single-model TAs will not be sufficient. I've written about what DLT means for transfer agent infrastructure and the pressure to modernize is now coming from 2 commissioners.
Broker-Dealers: Question 4 is a direct challenge to your business model. DLT-native settlement may eliminate the intermediary entirely. If you can't operate in a world without traditional broker-dealer definitions, you need to start building or partnering with infrastructure that can. I've covered whether asset management is the killer app for tokenization, and the answer depends on who controls the rails.
The Vertalo Securities Protocol was built to support all 5 tokenization models the SEC identified in January. That wasn't an accident.
Source: Peirce, H. (2026, March 12). Adam's Lib: Remarks at the Meeting of the SEC Investor Advisory Committee. U.S. Securities and Exchange Commission. https://www.sec.gov/newsroom/speeches-statements/peirce-remarks-iac-031226