Hester Peirce, a commissioner at the US Securities and Exchange Commission (SEC), thinks it’s time for a major shift in how the SEC handles crypto. She’s advocating for a less aggressive approach, moving away from using enforcement actions to essentially make the rules.
The Problem with Enforcement-First
Peirce points out that for years, the SEC has been using lawsuits to define crypto policy – a pretty unusual way to do things. She wants the SEC to use its other tools to create clearer rules instead. The recent pause in the SEC’s lawsuit against Binance, the world’s biggest crypto exchange, shows this shift in action. While the SEC initially sued Binance for allegedly mishandling funds and breaking securities laws, they’re now asking for a 60-day pause to work on a better regulatory framework. Peirce emphasizes that each case should be evaluated individually, not used as a blanket policy.
A New Task Force, A New Approach
Peirce is leading a new SEC task force focused on creating a clear and comprehensive regulatory framework for crypto. This includes figuring out which digital assets are securities and which aren’t, and defining areas where the SEC doesn’t have authority. Her past support for Bitcoin ETFs and her dissenting opinions on SEC actions have earned her the nickname “Crypto Mom” within the crypto community.
Congress’s Role (or Lack Thereof)
The SEC’s tough stance on crypto has been partly fueled by Congress’s failure to pass laws clearly defining cryptocurrencies. This lack of clarity has caused a lot of confusion and legal battles, like the recent court case that rejected the SEC’s claim that XRP is a security. However, there’s hope on the horizon with bipartisan bills aiming to clarify the roles of the SEC and the Commodity Futures Trading Commission (CFTC) in regulating digital assets, and even a bill addressing stablecoins.
The Way Forward
Peirce acknowledges that the SEC’s approach has been legally messy and impractical. This has slowed down legal processes and left many crypto projects in a holding pattern. She believes the focus should be on tackling fraud and misconduct, while also expecting a surge in requests for regulatory guidance. The key is careful work during this transition to ensure a clear and fair regulatory environment for the evolving crypto market.
