U.S. cryptocurrency laws should be “reserved” and not regulate the technology as if every use is financial, says a U.S. Securities and Exchange Commission commissioner.
On June 29, Commissioner Hester Peirce – nicknamed “Crypto Mom” – appeared remotely at Australian Blockchain Week and was asked how she would regulate crypto, responding:
“I think we need to make sure that whatever regulatory framework you have, don’t just assume everything is a financial asset.”
Peirce explained that cryptography is viewed in “very financial terms”, other uses exist, such as allowing people to interact without requiring a centralized entity.
“It’s useful in the financial context, but it’s also useful for creating a social media platform or whatever,” she said.
Investor protection is important, but the government must have a good reason to prevent people from investing their own money as they see fit: https://t.co/QgPm38iSrp
—Hester Peirce (@HesterPeirce) June 27, 2023
Peirce thinks any legal framework should take “a reserved approach” but include “enough clarity that people feel they can try things out”.
“There is something to be said for not putting in place a framework so rigid that it does not adapt to new uses for crypto and blockchain.”
In an apparent blow to the SEC’s current approach — which many have criticized, including Peirce — the commissioner said laws “can’t be stood aside, and then all of a sudden (regulators) come in five years later with a bunch of enforcement action.”
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Asked about her crypto advocacy, Peirce said she thinks the SEC “can do better” and thinks if it can’t speak freely, “then I don’t know why I’m in this position.”
“Crypto presents (the SEC) an opportunity to rethink our approach to innovation…I really think we’ve taken an approach that’s not appropriate,” she said.
Alluding to the collapse of FTX and subsequent allegations of misconduct, Peirce advised the crypto industry to self-regulate and pay attention to counterparty risk, conflicts of interest, and leverage.
“These 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.”
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