The commissioner of the US Securities and Exchange Commission (SEC) called for a “coherent and consistent legal framework that works across all asset classes,” including crypto assets. She warned that the SEC’s current enforcement-oriented approach would take 400 years to review all crypto tokens that are purported to be securities.
SEC Commissioner for Crypto Regulation
US Securities and Exchange Commission (SEC) Commissioner Hester Peirce spoke about crypto regulation in her speech at the “Digital Assets at Duke” conference on January 20.
Noting that the securities regulator has “pursued registration violations in a seemingly haphazard manner, often years after the original offering,” the commissioner emphasized:
We need to develop a coherent and consistent legal framework that works across all asset classes. Our imprecise application of the law has created arbitrary and destructive results for crypto projects and customers.
“When we insist on applying the securities laws in this way, secondary token buyers are often left holding a bag of tokens they cannot trade or use because the SEC requires special treatment under the securities laws,” Peirce warned. “Many of these claims are enforced under a strict liability standard, so clarity is key.”
The commissioner continued: “Why not put a coherent legal framework in the rule?” elaboration:
After all, if we were to continue with our regulation-by-enforcement approach at the current pace, we’d be approaching 400 years before we pass through tokens that are purported to be securities.
“In contrast, the SEC rule would have universal — though not retroactive — coverage once it goes into effect,” she noted.
Commissioner Peirce further explained, “A rational framework should make it easier for bona fide crypto actors to comply with our securities laws, which would free up the SEC to focus more of its resources on bad faith actors.”
However, she warned:
Cryptoregulation is not easy to make good. If crypto-institutions are treated like ordinary depository institutions, requiring large layers of capital and lots of legal staff, crypto-innovation is likely to diminish.
This was not the first time that Commissioner Peirce has expressed concern about the way the SEC regulates the crypto sector. She has repeatedly criticized the securities watchdog for its approach aimed at enforcing the regulation of the crypto space. She also believes the regulator should have already approved a spot bitcoin exchange-traded fund (ETF). Last May, she warned that the SEC had dropped the ball on crypto oversight, saying, “We’re not allowing innovation and experimentation to develop in a healthy way, and there are long-term consequences of that failure.”
Commissioner Peirce is not alone in being concerned about the SEC’s enforcement-oriented approach. US Congressman Tom Emmer (R-MN), for example, has repeatedly criticized SEC Chairman Gary Gensler. “Under Chairman Gensler, the SEC has become a power-hungry regulator,” the lawmaker said last July.
Do you agree with SEC Commissioner Hester Peirce? Let us know in the comments section below.
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