Peirce claims that regulators need to establish a framework that "doesn't just assume that everything is a financial asset."
Hester Peirce, a commissioner at the US Securities and Exchange Commission (SEC), recently suggested that American crypto regulations should not treat all cryptocurrencies as solely financial entities, pointing to a broader spectrum of potential uses.
Speaking remotely at Australian Blockchain Week on June 29th, Peirce, who earned the "Crypto Mom" nickname, urged regulators to take a more balanced approach to cryptocurrency regulation.
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When answering the question about the crypto industry's regulation, Peirce noted:
I think we have to make sure that whatever regulatory framework you have doesn't just assume that everything is a financial asset.
Although cryptocurrency is often considered in various financial contexts, Peirce emphasized that it also facilitates decentralized interactions. This functionality, she pointed out, is not only beneficial in finance but could be instrumental in other domains, such as the development of social media platforms.
Moreover, Peirce called for a regulatory framework that provides "enough clarity that people feel that they can try things," encouraging an environment of innovation.
There is something to be said for not putting a framework in place that is so inflexible that it doesn't accommodate the new uses of crypto and blockchain.
Turning her attention to the SEC's current approach to cryptocurrency, Peirce critiqued the regulator's strategy. The commissioner boldly stated her belief that the SEC “can do better.” In the spirit of openness, Peirce noted:
Crypto presents <the SEC> an opportunity to rethink how we approach innovation <...> I really think we've been taking an approach that is not appropriate.
Drawing on recent events such as the FTX collapse, Peirce underscored the importance of self-regulation within the cryptocurrency industry. She advised the sector to be mindful of counterparty risks, conflicts of interest, and leverage, noting that while these considerations don't require a government mandate, regulators can still provide valuable guidance.
Hester Peirce's remarks underscore the ongoing debates surrounding cryptocurrency regulation. Her comments, grounded in the belief that the SEC "can do better," serve as a rallying cry for regulators to consider the multi-faceted nature of cryptocurrencies.
