Peirce questions SEC reach over blockchains

SEC Commissioner Hester Peirce said securities laws should not automatically extend to blockchain networks, open-source code, or noncustodial software, framing crypto regulation as a question of where oversight boundaries should be drawn.

Speaking at the IC3 Blockchain Camp in Princeton, New Jersey, Peirce argued that regulators should distinguish between neutral blockchain infrastructure and activities that resemble traditional securities market functions.

“In some cases, the blockchain is used to perform functions similar to those performed by these intermediaries, but it is not clear that our rules should apply to the blockchain itself, given that blockchains are used to do many things other than transact in securities,”

Said SEC Commissioner Hester Peirce.

Peirce said the SEC’s existing framework was built around intermediaries such as brokers, dealers, exchanges and custodians, creating challenges when applied to systems designed to minimise reliance on those entities.

Her comments suggest that regulatory scrutiny should focus on who controls assets, exercises discretion, or performs securities-related functions rather than on the technology layer itself, a distinction that could affect DeFi projects, validators, node operators and software developers.

The commissioner also indicated that centralised crypto firms that hold customer assets or make decisions on behalf of users could remain subject to securities regulation even as decentralised and noncustodial systems receive different treatment.

Peirce urged the industry to strengthen audits, improve key management practices, enhance security protections and provide clearer disclosures around decentralisation, while defending users’ ability to transact through shared software without automatically triggering exchange registration requirements.