Regulation
“I’m Not Your Mother” – DL News
- The cryptocurrency advocate spoke about her career at the SEC.
- He talked about elections, “frustration” in some cases of the SEC and Stoner Cats.
Securities and Exchange Commissioner Hester Peirce is pleased to promote innovation in the cryptocurrency sector.
But don’t call her the “mother of cryptocurrencies.”
Peirce has earned the cryptocurrency industry’s affection, and the nickname “crypto mom,” for her advocacy of the sector and her vocal dissent from regulatory proposals and lawsuits targeting the industry under Chairman Gary Gensler.
However, Peirce, who leans libertarian, says he sees cryptocurrencies as a choice that American consumers should be able to make for themselves.
“I think it’s funny, but at the same time, I have a little problem with the term ‘mom,'” the commissioner said. DL News.
“I’m not your mother.”
DL News spoke with Peirce about the SEC’s crackdown on cryptocurrencies, cryptocurrency exchange-traded funds, and the upcoming election.
A new chair
Some have suggested that Peirce, one of the SEC’s two Republican commissioners, could become its next chairman if Donald Trump is elected president in November.
Join the community to receive our latest stories and updates
That would be a boon to the cryptocurrency industry, for which Gensler has become an iconic foe.
Gensler’s term runs through 2026, but SEC chairs tend to step down sooner than expected if a new administration takes office.
“If the chairman changes, typically the chairman of the SEC will change in response,” Peirce said.
The position is one of power.
The president sets the agency’s agenda and does so independently of the executive branch, which is not necessarily true of all federal regulators.
However, when asked about the succession at the SEC, Peirce declined to make any predictions.
“It could be anyone, the president has broad discretion” in choosing, he said.
Read about encryption
Some politicians believe that pro-crypto voters could decide the outcome of November’s elections in swing states.
Likewise, lawmakers have realized that they must act quickly to pass cryptocurrency legislation.
The FIT21 Act, which creates a market structure for cryptocurrencies, passed the House of Representatives in May.
The bill would give the SEC’s sister agency, the Commodity Futures Exchange Commission, more authority over cryptocurrency spot markets.
Gensler and his CFTC counterpart Rostin Behnam work closely together. But they clearly disagree on one issue: While Gensler says most cryptocurrencies are securities, Behnam advocates for them as commodities.
The SEC and CFTC “need to step back and remember that we both serve the American people.”
—Hester Peirce
Peirce said he does not view the relationship between the SEC and the CFTC as a rivalry and is happy to see Congress work to decide where to allocate authority.
“We need to step back and remember that we both serve the American people and American markets. We should think about who is best to perform function x or y, as Congress has directed us to,” he said.
Legislation in this sector must take into account that the potential innovation has nothing to do with the status of cryptocurrencies as financial assets, he said.
“There’s a lot going on in the cryptocurrency world that has nothing to do with financial markets,” Peirce said.
For example, a decentralized physical infrastructure does not fit perfectly into the financial legal framework.
Regulations for the execution
Cryptocurrency industry lobbyists say they want regulation because, without it, the SEC must resort to enforcement.
The Supreme Court recently gave hope to cryptocurrency plaintiffs.
In a historic reversal of the so-called Chevron doctrine, the court essentially made it easier for judges to overrule regulators in cases where the statutes are unclear.
Peirce said the agency is “still processing” what impact the ruling might have on its cases.
She said, however, that she has always been focused on following the intentions of Congress.
“We have to stick closely to what Congress has told us,” he said.
The SEC must ensure that it adheres to the authority granted to it by Congress and does not “seek to adopt overly aggressive interpretations.”
Peirce did not comment on the open cases: the agency is currently suing exchanges Coinbase, Binance, and Kraken, among others.
But he said the SEC’s court victory against blockchain publishing firm LBRY was a low point in his career as commissioner.
“This was a project where a lot of really substantial work had been done, and yet we decided to litigate it and ended up shutting it down,” he said.
The SEC alleged that LBRY had violated securities laws.
“There were no allegations of fraud, it was a registration violation, and that struck me as problematic,” Peirce said.
Peirce said a lawsuit against non-fungible token project Stoner Cats that ended in a settlement seemed arbitrary.
“If we applied similar logic in other contexts, we could bring cases against all types of non-digital collectibles issuers,” he said.
Contrary to Gensler, who has an oft-repeated maxim that cryptocurrency companies simply need to “go to the SEC and register,” Peirce said it’s difficult for cryptocurrency companies to get guidance from the regulator.
“There’s a real hunger for generalized guidance, and we could have gotten that out there and helped both of these projects, as well as a lot of others,” he said.
ETF Approvals
Investors are eagerly awaiting the SEC’s approval of Ethereum ETFs, which Gensler says will likely happen this summer.
Peirce did not comment on whether the SEC will approve the Solana ETF applications.
But he said cryptocurrency ETFs should be treated the same.
“That was my big frustration with the Bitcoin ETF saga. We went back and forth for 10 years” with issuers, he said, until a court essentially ruled that the SEC had to allow ETFs.
“We just had to apply the same rules we apply to other things and analyze the facts and circumstances of each application.”
He cautioned, however, that the SEC’s green light does not equate to a guarantee of the product’s safety.
“Investors have different risk tolerances, different things they look for, different portfolios. Their time horizons are different,” he said.
After all, she’s nobody’s mom: she doesn’t tell anyone how to invest.
“You, as an individual, can make decisions for yourself and your family better than anyone else, because you know your circumstances better than anyone else, you know your dreams better than anyone else,” he said.
“Too often we, as regulators, step in and say, ‘I’m going to tell you what to do with your life.’”
Contact the author at joanna@dlnews.com.