SEC Commissioner Worried Tight Regulation Could Thwart Crypto Innovation
A senior official from the US Securities and Exchange Commission (SEC) has voiced her opposition to attempts by her fellow regulators to enforce strict regulation on cryptoassets instead of promoting self-regulation. The latest statement by Hester Peirce, one of two Republicans among the five SEC commissioners, indicates a growing discord on crypto policy among the agency’s top brass.
Peirce told The Financial Times she was worried about the push by a number of the SEC regulators to play a more active role in the cryptocurrency market, and how this trend could potentially thwart innovation and discourage investors.
“I am concerned that the initial reaction of a regulator is always to say ‘I want to grab hold of this and make it like the markets I already regulate’,” she said. “I am not sure that’s going to be great for innovation.”
While Peirce did not name any commissioners she disagreed with, her comment came amid a campaign by Gary Gensler, the new SEC’s chair, to place cryptoassets within a tighter regulatory framework.
On May 26, appearing before the Subcommittee on Financial Services and General Government of the Appropriations Committee at the US House of Representatives, the lower chamber of the country’s parliament, Gensler (re)told lawmakers that cryptocurrencies are a “highly volatile and speculative asset class,” and that many tokens are investment contracts that fall under the US securities law.
Referring to the value of the global cryptoassets market, the regulatory tsar said the figures on the reported trading volume are not audited or reported to regulatory authorities as the exchanges are not registered with them. “That is just one of many regulatory gaps in these crypto asset markets,” he said.
Commenting on Gensler’s remarks, Peirce said she was “concerned about trying to make it harder for people to do truly peer-to-peer transactions,” and that she believed “regulation doesn’t all have to happen at government level.”
“You can have pretty effective self-regulation,” she said.
And Gensler is not the only one pushing for more and tougher crypto regulations. For example, in May, three major federal bank regulators – Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the Federal Deposit Insurance Corporation – held the first meeting of “an inter-agency sprint team,” focused precisely on crypto regulation.
Peirce joined the agency in 2018 after being appointed by former US President Donald Trump, quickly earning the ‘Crypto Mom’ monicker for her willingness to push for the blockchain technology within a regulatory framework.
Last April, on Peirce’s initiative, an updated version of the token safe harbor proposal was released, which aims to enable crypto businesses to offer tokens under initial coin offerings (ICOs) in compliance with the SEC’s rules, earning Peirce praise from various crypto industry representatives.