Maxwell Mutuma
In a recent statement at the Blockchain Association Policy Summit, SEC Commissioner Hester Peirce emphasized the need for the Securities and Exchange Commission (SEC) to regulate the cryptocurrency industry more effectively. Highlighting the importance of clear and focused regulatory efforts, Peirce critiqued the SEC’s current approach, citing the handling of the case against crypto startup LBRY as an example.
Hester Peirce Highlights Flaws in SEC’s Crypto Regulation
Peirce’s remarks shed light on the SEC’s challenges in regulating the rapidly evolving crypto sector. She pointed out inconsistencies in the agency’s enforcement actions, specifically questioning why certain firms were charged while others were not. The LBRY case, where the SEC charged the firm in March 2021 for selling unregistered securities and won a subsequent legal battle, was labeled by Peirce as a “low point.” She criticized the SEC’s resource allocation and the seemingly arbitrary nature of its enforcement actions in the crypto industry.
The SEC Commissioner stressed the importance of prioritizing cases involving “real harm” and suggested that the SEC streamline its process through rulemaking. According to Peirce, this approach would conserve resources and provide clearer guidance to the industry, preventing firms from interpreting enforcement actions to understand regulatory expectations.
SEC Commissioners Split on Crypto Regulation Approach
Peirce’s comments come at a time when the SEC, under the leadership of Chair Gary Gensler, has been actively pursuing charges against major players in the cryptocurrency space. Gensler has consistently maintained that most cryptocurrencies qualify as securities and that crypto firms must register with the agency. However, Peirce argues that a more efficient approach would involve both enforcement and the development of clear regulations, thereby reducing the need for firms to “read the tea leaves” of SEC actions.
Regarding the need for Congressional involvement, Peirce believes that it would be beneficial in defining the regulatory authority over cryptocurrencies. This viewpoint contrasts with Gensler’s stance, which has previously stated that the existing regulatory framework is adequate for overseeing crypto.
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