Hester Peirce, a commissioner at the Securities and Exchange Commission (SEC), said on Thursday that she believes the regulator can do more to help the cryptocurrency industry in the US develop.
In a speech delivered via video link to a crowd in Palo Alto, California, Peirce noted that she had given a speech one year ago discussing her fears about what the SEC would do to the cryptocurrency market.
During that speech, the SEC commissioner said she was worried the regulator would constrain innovation through over-regulation and that she wanted a “regulatory beach” and not a “regulatory sandbox.” A ‘beach’ would allow for a wide reign of activities; a sandbox would be constricting.
But in yesterday’s speech, Peirce said that her fears had been misplaced. Rather than the regulator overplaying its hand, the commissioner said it has not been clear enough or put in place adequate rules to govern the industry.
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Comparing the financial watchdog’s approach to a Jackson Pollock painting, she said the SEC has been “splashing lots of factors on the canvas without any clear message.”
More specifically, she highlighted the regulator’s lack of regulations with regard to cryptocurrency brokers and companies offering trading platforms.
Significantly, the SEC commissioner added that many existing securities could not be transplanted onto the cryptocurrency markets as they do not fit with the technology. Peirce added that, by not putting regulations in place, the SEC was risking crushing much of the crypto market.
“Without a functional secondary market,” said Peirce, “which encompasses broker-dealers and trading platforms that can legally trade digital securities, and advisers and funds that can buy and hold the assets, the primary market in the U.S. will wither and retail investors will not enjoy the protection our securities laws offer.”
Finally, Peirce also stated that there needs to be much clearer guidance on which tokens are securities and which are not. Giving the example of a company that had been contacted by the SEC for issuing tokenized gift cards, she said that the blanket treatment of tokens as securities is not nuanced and could stifle innovation, with companies not wanting to tokenize products if they fall under financial regulatory laws.