A commissioner from the U.S. Securities and Exchange Commission (SEC) warned that the securities market regulator has dropped the ball on crypto regulation. “We do not allow innovation to flourish and experiments to take place in a healthy way, and this failure has long-term consequences,” the commissioner said.
SEC Commissioner Warns of ‘Failure’ of Crypto Regulation
In an interview with CNBC on the sidelines of the DC Blockchain Summit this week, SEC Commissioner Hester Peirce expressed her concerns that the US is dropping the ball on the regulation of cryptocurrencies.
Also known in the crypto community as the “crypto mother” for her support for the industry, Peirce discussed the challenges in the crypto ecosystem from a regulatory perspective. First, the commissioner talked about fraud and said, “There’s a lot of fraud in this area because it’s the hottest area of the moment.”
However, he stressed that what worries him more is the SEC dropping the ball on crypto regulation. Peirce said:
The other part that worries me is the way we drop the regulating ball.
“We do not allow innovation to flourish and experiments to take place in a healthy way, and this failure has long-term consequences,” the commissioner warned.
The crypto market has suffered a huge loss in recent weeks, losing nearly $500 billion since the beginning of the month.
The market downturn was exacerbated by the collapse of cryptocurrency terra (LUNA) and algorithmic stablecoin terrausd (UST). The two cryptocurrencies lost almost all of their value within days. The disaster prompted Congress to call for urgent regulation of stablecoins.
Following the explosion of the two cryptocurrencies, SEC Chairman Gary Gensler warned that many crypto tokens will fail and investors will suffer. He has repeatedly said that many coins listed on crypto exchanges are securities and must be registered with his agency. However, Gensler also stressed that the SEC does not have enough resources to adequately supervise financial markets, noting that the regulator is truly “above the person”. He also said that crypto exchanges frequently trade against their clients.
The SEC under Gensler has so far been practice-centric. Since the securities watchdog launched a unit dedicated to crypto-asset surveillance in 2017, it has brought in more than 80 enforcement actions against crypto companies. The agency recently announced that the Enforcement Division will nearly double the size of the cryptocurrency.
Peirce highlighted the need for regulatory clarity from the SEC, adding that there is still a lot of work to be done within the current authorities. “They need regulatory clarity from us to be able to do that,” he said, noting that traditional financial institutions want to get involved in crypto.
The Commissioner expressed the following comments:
We can pursue fraud and play a more positive role on the innovation side, but we have to succeed, we have to work… I haven’t seen any willingness to do this work until now.
What do you think of SEC Commissioner Peirce’s comments? Let us know in the comments section below.
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