SEC's Peirce warns DeFi builders: blockchain is not a regulatory shield

She said regulators will focus on the economic substance of a product rather than its decentralized architecture. Many DeFi protocols rely on smart contracts instead of traditional intermediaries. Peirce indicated the SEC will evaluate each crypto asset on its own merits. She urged developers to consult the commission to understand the limits of regulation and to suggest modernizing existing rules.

Peirce reiterated a position she has held in previous speeches: blockchain innovation should not be confused with regulatory immunity. She noted earlier that tokenized securities remain securities regardless of whether they are issued or traded on blockchain networks. The SEC's jurisdiction is not diminished by the technology used for trading, she said.

Peirce is planning to leave the SEC in November to join academia at Regent University School of Law. She has led the Crypto Task Force since January 2025.

The SEC is also reviewing tokenization. Wall Street transfer agents have asked the agency to focus on tokens issued by companies themselves, arguing that third-party tokens do not guarantee shareholders' rights. The CLARITY Act, under consideration in Congress, would clarify regulatory jurisdiction for both the SEC and the Commodity Futures Trading Commission.

Peirce's position leaves room for non-regulated vaults and lending mechanisms, she said, and makes clear that blockchain technology does not equal securities compliance.