Peirce: SEC Regulatory Efforts are 'Disappointing'
SEC Commissioner Hester Peirce is increasingly frustrated with the US Securities and Exchange Commission, she tells CoinDesk TV, with no serious progress in five years on providing the industry better and more supportive clarity in its regulation efforts.
“It's disappointing,” she told CoinDesk. “I've been here for five years now and I've seen very few proactive steps toward trying to [in advance] set up a regulatory regime that makes sense…You can't have this system where everyone is unable to move forward because everything is so ambiguous.”
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“If we had a better framework in the U.S. [for crypto], I think you would see more activity happening [here]. But now people have so many questions that a lot of stuff ends up happening outside of the United States. And that means that when U.S. persons participate, they won't have the protection of the U.S. regulatory framework,” she said.
The SEC’s mandate is to protect U.S. retail investors and regulate fair and orderly markets. But last year a string of collapses led to the bankruptcy filings of FTX, Celsius Network, Voyager Digital, BlockFi and CoinDesk sister company Genesis – leaving their millions of customers in the lurch.
The commissioner has complained about the way the agency regulates in the crypto sphere since her term began during the presidency of Donald Trump. In 2020 she told Decrypt, just after being sworn in for a second term, that patchy SEC guidance made things even more complicated for crypto companies.
Regulation hasn’t moved along a whole lot since then. When Peirce’s new boss, Gary Gensler, became the SEC chair in April 2021 under President Joe Biden, he continued the agency’s longstanding policy of “regulation through litigation,” where companies learn of their infractions when the SEC sues them for breaking the law.
Last year, the regulator sued BlockFi for $100 million over its interest-bearing crypto account, and just last month lodged complaints against Genesis and Gemini for selling unregistered securities. Gensler told Yahoo Finance in December that the SEC has brought over 100 crypto enforcement cases against crypto-related companies.
But while Peirce, who declined to comment on Gensler’s tenure, said enforcement actions are “important work,” she said the agency has not created “an environment within which good activity can flourish.”
Some of the complications of trying to write a regulatory policy through enforcement actions are apparent with the BlockFi settlement, she said. “If we had simply been more proactive in a regulatory way on crypto lending, we could have had a framework in place that would have applied to everyone,” she said.
Such a framework could have “taken into account a wide range of views about what the right approach was there.”
Peirce pointed a finger at her colleagues who “don’t think that any clarity is needed.” Her peers “think there’s plenty of clarity” – and do not see much point in regulating crypto, a technology they do not consider useful.
Pierce’s own efforts include a proposal to give three years to development teams to decentralize their projects before the SEC can sue them. The bill, sometimes called the token safe harbor, was introduced in February 2020, revised in 2021 and never gained traction within her own agency.
However, its spirit was contained within the Clarity for Digital Tokens Act of 2021 introduced in Congress by Rep. Patrick McHenry (R–N.C.), a longstanding advocate of crypto regulation who in December was became chairman of the House Financial Services Committee. But that bill died last month after little fanfare.