On March 12, the IAC held its first meeting of 2026, and the agenda read like a roadmap for the next twelve months of crypto policy: public company disclosure reform, fund proxy voting, and — the main event for our purposes — a formal vote on recommendations regarding the tokenization of equity securities. Chairman Atkins used his opening remarks to confirm what many of us have been hoping for: the innovation exemption is coming (soon?).
What actually happened at the IAC meeting
The March 12 IAC meeting featured three agenda items, but the third is the one that lit up my inbox. The IAC’s Market Structure Subcommittee brought forward a draft recommendation on the tokenization of equity securities — defining “tokenized equity securities” as crypto assets that meet the definition of equity securities under the federal securities laws. The draft outlined the expected efficiencies (atomic settlement, enhanced transparency into shareholder ownership) alongside the expected risks (settlement mechanics, intermediary regulation, investor safeguards). The Subcommittee emphasized — and this matters — that reforms to existing regulations should not compromise fundamental investor protection principles.
Chairman Atkins opened with what I’d call the thesis statement for the Atkins SEC. He invoked his “minimum effective dose of regulation” formulation — a phrase worth keeping in your back pocket — and then turned directly to tokenization: “I expect the Commission to soon consider an innovation exemption to facilitate limited trading of certain tokenized securities with an eye toward developing a long-term regulatory framework.” Paul S. Atkins, Remarks at the Investor Advisory Committee Meeting (Mar. 12, 2026). He praised the IAC for “recognizing that tokenization can enhance settlement efficiency, reduce settlement risk, and eliminate unnecessary intermediaries.” Id.
“Soon” is doing a lot of work in that sentence. But when the Chairman says it at an official IAC meeting while the Committee is voting on tokenization recommendations, and when it builds on thirteen months of Crypto Task Force roundtables, hundreds of meetings with market participants, and scores of written public submissions, you should take him at his word. This is not a trial balloon. It is a departure notice.
Peirce’s framework: What she told us in December (and why it matters now)
Commissioner Peirce’s most substantive treatment of these issues came in her December 4, 2025 IAC remarks, titled “Iceboxes and Soapboxes.” Hester M. Peirce, Comm’r, SEC, Iceboxes and Soapboxes: Remarks at the Meeting of the SEC Investor Advisory Committee (Dec. 4, 2025). That speech laid out the analytical architecture that appears to be driving the Commission’s tokenization agenda. The March 12 meeting is the payoff. Here are the pillars:
- Tokenized securities are still securities. Peirce was clear: “The tokenization of equity securities has the potential to transform how securities are issued, traded, and settled and empower investors by giving them more direct control over their assets.” But transformation of form does not change the underlying legal substance. Securities offerings are securities offerings are securities offerings. (If you have been reading this newsletter for any amount of time, you know this is a hill I will die on.)
- Different tokenization models raise different regulatory questions. This is the part builders need to pay close attention to. Peirce distinguished between issuer-sponsored securities “issued directly on blockchain networks” — which “maintain full integration with master security holder files” and “preserve traditional ownership rights while enabling direct ownership” — and third-party sponsored tokens that may provide “synthetic exposure to an equity’s price movements though derivative instruments, such as through tokenized structured notes or security-based swaps, but offer no ownership or voting interest in the issuer.” Id. If you are building a tokenized securities platform, your choice between these models determines the contours of your obligations under the Securities Act of 1933 (15 U.S.C. § 77a et seq.) and the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.). This is not an academic taxonomy exercise. It is the most consequential structuring decision you will make.
- The intermediary question is the big one. This is where things get genuinely interesting. Peirce observed that “technologically savvy investors will be able to buy, sell, and hold assets without a traditional intermediary (or without any intermediary at all). Determining how to fit this activity into our rulebook, which is built around intermediaries, is challenging.” She then went further: “Some rules may not be necessary to advance the regulatory objective they ostensibly serve given distributed ledger technology’s ability to reduce certain risks and enhance transparency.” Id.Read that again. A sitting Commissioner who leads the SEC’s Crypto Task Force is acknowledging that certain existing rules may be superfluous when the technology itself addresses the underlying risks those rules were designed to mitigate. That is not permission to ignore the rulebook. But it is a meaningful signal that the Commission is open to the idea that the rulebook might need to shrink as well as expand. For those of us who spent the Gensler years watching the SEC treat every blockchain interaction as a potential enforcement target, this is a different planet.
- Urgency. “We do not have the luxury of time in tackling these questions,” Peirce warned, noting that “anybody can spin up a liquidity pool or launch a trading protocol that enables investors to get exposure to our equities markets.” Id. Her concern: if the SEC takes too long, “American investors will buy tokenized securities overseas.” This is not a hypothetical. DeFi composability makes it trivially easy to access tokenized U.S. equities through offshore protocols. The SEC knows this, and — in a refreshing change from the prior regime — seems to view it as a reason to act rather than a reason to sue.
From enforcement whack-a-mole to “Project Crypto”
To why this IAC meeting matters, you need the broader context. Under the Gensler Commission, the SEC’s approach to crypto was what Chairman Atkins has aptly called “regulation by enforcement” — a regime where market participants learned what the SEC considered lawful only after the SEC sued them. See, e.g., SEC v. Ripple Labs, Inc., No. 1:20-cv-10832 (S.D.N.Y.); SEC v. Coinbase, Inc., No. 1:23-cv-04738 (S.D.N.Y.). Commissioner Peirce spent years dissenting from that approach, including her Token Safe Harbor proposals of 2020 and 2021 that the prior Commission effectively shelved.
The pivot since has been dramatic. The Atkins SEC has rescinded SAB 121 (replaced by SAB 122), approved generic listing standards for crypto ETPs, issued staff statements clarifying that memecoins, stablecoins, proof-of-stake staking, and liquid staking fall outside the scope of securities laws, and issued the landmark DTC tokenization no-action letter in December 2025 authorizing a three-year pilot for tokenized custodied assets. Peirce herself called the DTC letter a “significant incremental step in moving markets onchain.”
The intellectual cornerstone was laid in Atkins’ November 2025 “Project Crypto” speech, which introduced a token taxonomy anchored in Howey. SEC v. W.J. Howey Co., 328 U.S. 293 (1946). The critical innovation: investment contracts can expire. As Atkins put it, channeling Peirce: “A token is no more a security because it was once part of an investment contract transaction than a golf course is a security because it used to be part of a citrus grove investment scheme.” Paul S. Atkins, The SEC’s Approach to Digital Assets: Inside “Project Crypto” (Nov. 12, 2025). Networks mature. Code ships. Control disperses. The issuer’s role diminishes or disappears. At some point, the Howey analysis simply no longer applies.
This framework — which was practically unthinkable under the prior Commission — has profound implications for token structuring. The working assumption under Gensler was effectively “once a security, always a security.” The Atkins-Peirce framework provides a doctrinal pathway for tokens to transition out of security status as networks decentralize. [1]
What the innovation exemption will (and won’t) be
At ETHDenver in February 2026, Peirce and Atkins provided the most detailed preview yet. Peirce was notably measured: “Both groups [crypto firms and TradFi skeptics] are likely to realize that the innovation exemption is not as monumental as either faction anticipated.” The exemption will be “limited in time and scope” — designed to “facilitate limited trading of certain tokenized securities on novel platforms.” Think of the DTC no-action letter as a template: a tightly scoped, time-limited sandbox conditioned on anti-fraud and anti-manipulation rules, recordkeeping, reporting, and SEC oversight.
This should temper some expectations. The innovation exemption is not a green light to trade any crypto asset on any platform without registration. It is more likely a controlled experiment — incremental by design — meant to generate data and experience before the Commission undertakes notice-and-comment rulemaking under the Administrative Procedure Act (5 U.S.C. § 553). “Incremental” in the context of U.S. securities regulation is still significant. We are moving from an era where the SEC’s answer to crypto innovation was an enforcement action to one where the answer is conditional exemptions and (eventually) formal rulemaking. That is not nothing.
What builders and practitioners should actually do right now
Here’s where I put on my practitioner hat:
- Don’t mistake a thaw for spring. The regulatory environment has improved dramatically, but we remain in transition. The innovation exemption has not been issued. The token taxonomy has not been codified through rulemaking. Staff statements and no-action letters are helpful but revocable. Build your compliance posture around the existing framework while positioning to take advantage of new pathways as they materialize.
- Tokenization model choice is a first-order decision. Peirce’s distinction between issuer-sponsored direct issuance and third-party synthetic models is not idle taxonomy. Your registration, disclosure, and intermediary obligations vary dramatically. If you’re building a tokenized securities platform, get this decision right before you write a single line of code (or Solidity).
- The “investment contract lifecycle” concept is real but unproven. The idea that a token can graduate from security status is now official Commission rhetoric. But nobody has tested the boundaries. There is no bright-line standard for when an investment contract “expires.” If you are structuring a token launch around eventual decentralization, document the roadmap, the milestones, and the transition meticulously.
- DeFi protocols: pay attention. Peirce has been consistently sympathetic to the argument that open-source developers should not be held liable for downstream use of their code — she argued as much in her August 2025 remarks on financial privacy. But “sympathetic” is not “has issued formal guidance.” If your protocol facilitates something that looks like securities trading, you need to be thinking about how the securities laws apply. Not tomorrow — now.
- Congressional action remains the endgame. Both Atkins and Peirce have repeatedly deferred to Congress on big-picture jurisdictional questions. “There is no stronger tool to future-proof against rogue regulators than sound statutory language from Congress,” Atkins said in November. The GENIUS Act and the CLARITY Act remain the legislative vehicles to watch. The SEC can do quite a lot with exemptive authority and interpretive guidance, but durable clarity requires a statute.
The bottom line is that the Atkins SEC is building something — methodically, incrementally, and with more regulatory humility than we have seen from this agency in years. The IAC tokenization vote and the Peirce-Atkins framework tell us the direction of travel. Whether the destination turns out to be as welcoming as the roadmap suggests remains to be seen. But for the first time in a long time, we are at least looking at a map rather than a minefield.
[1] To be clear, the doctrinal pathway is conceptually compelling but has not been tested in litigation. A court applying Howey could reach a different conclusion about when (or whether) an investment contract “expires.” This is new territory, and practitioners should treat it accordingly.
Written by David Lopez Kurtz