In a recent event, Hester Pierce from the United States Securities and Exchange Commission (SEC), shed light on crypto regulation in the US. She discuss the potential structure of the legislation, highlighting that the fact that all uses of cryptocurrencies are not financial.
Speaking remotely at Australian Blockchain Week on Thursday, the SEC commissioner said that cryptocurrency laws in the United States should be “reserved” and not regulate the technology as if its every use is financial. The recent comment comes amid the regulatory crackdown on crypto entities in the U.S.
Peirce, who is widely known as “Crypto Mom” provided details on how she would have preferred to regulate crypto if given a chance. She specifically highlighted that limiting the scope of cryptocurrencies to just financial means is not a good option. She said:
I think we have to make sure that whatever regulatory framework you have doesn’t just assume that everything is a financial asset.
The SEC commissioner explained that while crypto is thought of in “very financial terms,” there are several other uses such as enabling people to interact without requiring a centralized entity. She added that cryptocurrencies are useful in the financial context, but it’s also “useful in building a social media platform or whatever else.”
Peirce believes any legal framework should take “a reserved approach” but include “enough clarity that people feel that they can try things.” She targeted the conventional approach in the regulation which is focused solely on financial scope of crypto. Quoting her:
There is something to be said for not putting a framework in place that is so inflexible that it doesn’t accommodate the new uses of crypto and blockchain.
The SEC commissioner has been a long advocate of cryptocurrencies and have been consistent on her crypto-favouring stance. On being asked about her crypto advocacy, Peirce said she thinks the SEC “can do better” and believes if she can’t speak freely, “then I don’t know why I’m in that position.”
Crypto presents [the SEC] an opportunity to rethink how we approach innovation […] I really think we’ve been taking an approach that is not appropriate.
Following that, Peirce advised the crypto industry to undertake self-regulation and pay attention to counterparty risks, conflicts of interest and leverage.
Those are things you don’t need a government regulator to tell you to do, but I think government regulators can play a role in that.
Via her speech, the SEC commissioner also took a shot at the SEC’s current approach to crypto entities. Among several other criticisers of the securities regulator, there is Pierce, the commissioner who said the laws “can’t be reserved then, all of a sudden, [regulators] come in five years later with a bunch of enforcement actions.”
While Peirce is serving as the commissioner of the US SEC, she is often found to have troubles with Gary Gensler, chairperson of the agency. Peirce and Gensler have very contradictory approaches when it comes to regulating the crypto sector. While Peirce often advocates for the sector highlighting its benefits, Gensler criticizes it highlighting the risks involved.
In particular, in the past weeks, the SEC has been on an enforcement spree and as always have voiced for having stringent regulation. On the other hand, Pierce has stood up for comprehensive regulation of the sector and has even went on to appreciate European crypto legislation and UK’s approach to crypto industry.