The U.S. Securities and Exchange Commission’s (SEC), commissioner has warned the regulator that crypto regulation has been neglected. “We’re not allowing innovation to develop and experimentation to happen in a healthy way, and there are long-term consequences of that failure,” said the commissioner.
SEC Commissioner Warns About the ‘Failure’ of Crypto Regulation
Hester, SEC Commissioner, expressed concerns about the U.S.’s regulation of cryptocurrency in an interview with CNBC. This was on the sidelines at the DC Blockchain Summit.
Peirce, who is also known in the crypto community as “crypto mom” for her support of the industry, discussed challenges in the crypto ecosystem from a regulatory standpoint. Firstly, the commissioner mentioned fraud, stating that “There’s a lot of fraud in this space because it’s the hot area of the moment.”
She stressed, however that she is more concerned about the fact that the SEC had abandoned crypto regulation. Peirce said:
The other piece that does concern me is the way that we’ve sort of dropped the regulatory ball.
“We’re not allowing innovation to develop and experimentation to happen in a healthy way, and there are long-term consequences of that failure,” the commissioner warned.
Over the past weeks, the crypto market suffered an enormous loss of approximately $500 billion.
Market downturns were exacerbated due to the collapse of crypto terra (LUNA), and algorithmic stablecoin terrausd UST (UST). Within days, the two cryptocurrencies had lost most of their value. Congress has demanded urgent regulation for stablecoins after the catastrophe.
Gary Gensler (SEC Chairman) warned that many cryptocurrency tokens could fail, and investors would be hurt after the crash of two of their cryptocurrencies. Gensler repeatedly stated that many coins on cryptocurrency exchanges were securities, and should therefore be registered by his agency. However, Gensler also emphasized that the SEC does not have enough resources to adequately police financial markets, stating that the regulator is really “outpersonned.” He also said that crypto exchanges are trading against their customers often.
Gensler’s SEC is enforcement-oriented. More than 80 criminal enforcement cases have been filed against cryptocurrency companies by the Securities Watchdog since Gensler’s 2017 creation of a special unit for crypto asset monitoring. The agency recently announced that it will almost double the size of its Enforcement Division’s crypto unit.
Peirce highlighted the need to have regulatory clarity from SEC. She also noted that existing authorities are still insufficiently equipped. Citing that traditional financial institutions want to get involved in crypto, she stressed: “They need regulatory clarity from us in order to do that.”
According to the commissioner,
We can go after fraud and we can play a more positive role on the innovation side, but we have to get to it, we’ve got to get working … I haven’t seen us willing to do that work so far.
What do you think about SEC Commissioner Peirce’s comments? Please leave your comments below.
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