SEC’s personnel is very rarely on the spotlight, unlike members of other federal agencies. Hester M. Pierce is a crucial SEC (Securities and Exchange Commission) member, and she’s not any happier than crypto aficionados about the lack of speed with which her own agency is moving regarding the crypto verse.
The securities enforcement forum
She talked to her fellow regulators in Palo Alto, California (it doesn’t get any more Silicon Valley than that) during the Securities Enforcement Forum. Her talk was held last Monday. She expressed the concerns she’s had for a year already that the agency “as one of [the token market’s] potential regulators, would stifle its growth.”
She added a bit of humor to her talk by saying “I will admit today that I was very wrong, not about whether the SEC would stifle the industry’s growth—it has—but in how it would do it.” She may have invented crypto-sarcasm.
SEC hasn’t been too intrusive when it comes to cryptocurrencies. It hasn’t created lots of obstructive rules that hamper growth, as the commissioner feared. Instead, SEC has ignored it for the most part, and it’s been dragging its feet on clarifying or updating the rules of the game. She further explained that “I worried that hasty regulation would smother the industry in its infancy. My concerns did not become a reality. The enforcement actions we have taken to date in the crypto space have—for the most part—exhibited appropriate restraint.
On the regulatory side, “hasty” is not the word I would use to describe the SEC’s pace. It is not the SEC’s overzealous action that has stifled the crypto industry, but its unwillingness to take meaningful action at all.”
SEC deserves an applaud in reaching out to cryptocurrency start-ups, which has merit on its own because the industry changes so quickly. However, Mrs. Peirce is worried that the tools in SEC’s box (such as the Howey test, which is used to decide if a financial instrument is a security) are severely outdated. That could jeopardize the industry’s development.
SEC has been forward-thinking and open in dealing with start-ups, according to Mrs. Peirce, which is no mean feat. SEC’s Financial Hub network held a meeting (not too long ago) with blockchain companies in Denver, in which industry leaders had the chance to talk directly with would-be regulators.
But despite the agency’s right moves, it’s failed in providing clarity to the cryptosphere with the needed speed.
“The SEC has yet to provide guidance to the public or FINRA on any of the core questions. The result is that many would-be brokers and trading platforms are stuck in a frustrating waiting mode; they are unable to get clear answers to questions about how they may proceed in this market.”
She emphasized how proud she is of SEC’s work in the matter. But she also urged the agency to get over the prevailing inertia because it could render the agency’s successes meaningless,
“The U.S. securities markets have historically been the envy of the world; I do not want heel-dragging by the SEC in crypto to mar that well-deserved reputation.”
[Image courtesy of Flicker]
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