SEC Commissioner Peirce on ‘Crypto War’: The SEC Is Not Being Tech-Neutral
Commissioner Peirce laments a loss of American liberty in the SEC's crackdown on crypto
By: Zack Guzman
July 5, 2023
Considering all of the ways the Securities and Exchange Commission has now tried to crack down on the crypto industry, it’s not surprising there are more and more dissenters calling out problems with America’s top financial cop.
What might be more surprising, however, is that one of the loudest dissenters is actually one of the SEC’s five Commissioners herself – Hester Peirce.
In a new interview with the community-owned Web3 outlet Coinage, Commissioner Peirce lays out her largest laments working at an agency that she claims is no longer regulating crypto on a neutral basis.
“I understand why you want to warn the American public that if someone comes to you and is offering you something related to crypto, it might be something that is not legit and you want to ask some questions, that's fine. I mean, we put out those kinds of risk alerts about all kinds of things,” she said. “But this whole notion that there's a whole separate set of standards that apply — a separate higher set of standards that applies in the crypto space than anything else — that to me doesn’t sound very ‘tech-neutral.’”
Commissioner Peirce has long feared that the SEC’s strategy to delay providing regulatory clarity for crypto companies, or primarily policing the industry through lawsuits and enforcement actions would backfire. The latest move by the SEC to deny a wave of spot Bitcoin ETF applications from the likes of BlackRock and Fidelity is the most recent example to point to. In total, the SEC has now refused to approve more than three dozen Bitcoin ETF applications.
“I think one of the reasons that I've been critical and that some others have been critical is that in the absence of a regulatory framework that makes sense, you end up with a world in which it's really hard to distinguish the good actors from the bad actors,” she said.
People within the crypto industry share Commissioner Peirce’s fears that hopes for a regulatory pathway to operate in the U.S. are dimming. Solana founder Anatoly Yakovenko previously bemoaned the likelihood that America’s hardened stance on crypto might spill over to other jurisdictions. Exchange giants Coinbase and Gemini are already looking to bolster their operations off-shore. In another Coinage interview, Algorand’s CTO said it’s inevitable that more crypto jobs will move overseas.
Much of the anger for those dissatisfied with the SEC’s attempts to police crypto thus far are mostly triggered by a record of apparent hypocrisy. In his latest appearance before Congress, SEC Chair Gary Gensler claimed that crypto was to blame for the string of bank failures earlier this year. In one specific example, he said crypto was directly behind the failure of Signature Bank — a point refuted in Congress less than 24 hours later by New York Department of Financial Services Superintendent Adrienne Harris.
CAUGHT RED HANDED: SEC Chair Gary Gensler blamed crypto for Signature Bank's failure during his congressional testimony.— Coinage (@coinage_media) April 19, 2023
Today, NY Department of Financial Services Superintendent Adrienne Harris refuted that in front of the same committee:
"It is not the case that the failure… pic.twitter.com/1dwhRx5ZlD
Chair Gensler has also repeatedly attempted to make it appear that crypto companies are willfully ignoring his pleas to “come in and register” with the SEC to come into compliance. But even Commissioner Peirce noted that without clear legal frameworks in place, that is not a realistic option on the table for many.
“I mean, I haven't seen a lot of evidence of it working very well,” she quipped.
In the meantime, Congress has now stepped in with a bill of its own to set up a potential alternative path that wouldn’t have all cryptocurrencies fall under the scope of the SEC. Commissioner Peirce celebrated that initiative.
“I think too often regulators view the world through the lens of you can't do anything and you can't do something unless I tell you you can do something,” she said. “Now, again, there are statutes on the books and we uphold those statutes, but I'm always thinking about upholding them in this frame of ‘liberty is super important in the United States’ and I fear that in the conversations around crypto, we've lost a little bit of that sense of how important that principle is.”
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