SEC’s Hester Peirce Says Agency’s Current Approach Is “Just Not a Good Way of Regulating”


There has been little love lost between the Securities and Exchange Commission and the crypto industry. For years, the federal agency has taken a hard line against the startup sector, taking sporadic enforcement actions against individual crypto firms but offering little in terms of a coherent regulatory policy that crypto projects can look to for guidance. .

Industry leaders have long accused the SEC of taking an exceptionally unfair and unreasonable approach to crypto regulation; now one of the SEC’s own is singing the same tune.

SEC Commissioner Hester Peirce believes her agency is treating crypto like no other industry, with an aggressive approach that deviates from the way the agency usually regulates.

“Cryptocurrencies are being treated differently,” said Peirce decipher in an interview, explaining that many regulators saw it as a fleeting flirtation and not a burgeoning revolution.

“What drove this initially was the feeling that crypto probably wasn’t going to stick around,” Peirce said. “Why invest the resources in developing some kind of framework for something that is not going to stay?”

This dismissive mindset, according to Peirce, spurred an SEC approach to cryptocurrencies that relied solely on isolated enforcement actions. However, such a strategy goes against the way the agency usually generates rules and standards.

“Normally when we write a rule, we come out with a proposal,” Peirce said. “People are talking to the regulator, we are talking to the public. It’s a very healthy conversation.”

According to the Commissioner, so far there is not much that is healthy about how the SEC has interacted with crypto firms: bringing them on board one at a time, not to collaborate on policy, but to dictate the terms of a particular application.

“There’s no one else in the room,” Peirce said. “Clients are not in the room. The competitors are not in the room. And the regulator has the influence because he is about to initiate an enforcement action. It’s just not a good way to regulate.”

The current chairman of the SEC, Gary Gensler, has repeatedly insisted that it treats cryptocurrencies no differently than any other market under its purview. It has also gone out of its way to respond to criticism of its crypto policies by putting the onus on crypto companies, encouraging them to “come in and talk” if they are not happy with the regulations that are generated.

Billionaire investor Mark Cuban recently criticized Gensler for such commentsdismissing invitations from the chair as empty and cynical.

“Come in and talk to who? Schedule an appointment, how? Cuban tweeted at Gensler in late August. “Are you using Calendly these days?”

Peirce has also found such invitations to be pointless, saying that previous SEC meetings with crypto firms have led nowhere by design.

“If you’re going to tell people to come in, people need to see people coming in the front door and coming back out, with a waiver order or something that allows them to go about their business and allows us to meet our regulatory goals. targets,” Peirce said. “But if you just see people walk in and then you see them walk out with an enforcement action or nothing, people won’t want to walk in the door.”

So far, the SEC has not produced a single crypto-related exemption order — a statement from the agency clarifying that a certain action would be No be considered a securities violation or prosecuted by the SEC as such.

The SEC issues exempt orders to help educate companies on how to properly and legally navigate existing regulations. If history is any indicator, a waiver order on crypto is unlikely to appear any time soon.

Peirce sees the SEC’s unwillingness to engage in dialogue with the cryptocurrency industry, more than anything else, as a missed opportunity: one that could result in the federal agency not having a leading role in shaping an industry. criticism.

“Ultimately, you’re going to see aspects of this thing called cryptography permeating every aspect of our lives,” Peirce said. “And crypto once looked at the SEC, and said, ‘well, we think we can work with the SEC to build something that makes sense.’

“Now, more and more, I hear people say, ‘Well, I’m just going to go to the CFTC [Commodities Futures Trading Commission] and I hope they come up with a regulatory regime that we like,’” he added.

“It’s a shame that people have given up on us,” Peirce said. “Because we haven’t taken those steps to work in good faith.”

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