SEC Commissioner Hester Peirce warns that layer-2 blockchains with centralized matching engines may face exchange registration requirements. She advocates for regulatory protection of truly decentralized protocols that cannot be owned. Peirce emphasizes the importance of distinguishing between immutable code on decentralized networks and centralized entities using blockchain technology. Regulatory complexity arises from centralized transaction ordering in layer-2 solutions, which may trigger securities law obligations. Peirce prefers letting the community develop solutions for issues like Maximum Extractable Value (MEV) before intervening with regulation. The distinction is crucial as traditional securities move to blockchain infrastructure, with Peirce advocating for clear boundaries to protect developers while ensuring compliance for centralized intermediaries. Her regulatory philosophy supports principles-based oversight to preserve innovation while safeguarding investors.

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