U.S. Securities and Exchange Commissioner Hester Peirce reiterated her criticism of her agency’s approach to cryptocurrencies during a recent appearance at ETH Denver.
Peirce expressed dissatisfaction with the SEC’s tendency toward “enforcement regulation” and criticized the slow approval process for spot Bitcoin exchange-traded funds (ETFs).
inside A conversation with CNBC's Mackenzie SigalosPeirce highlighted the SEC's response to the Grayscale scandal that led to the approval of Bitcoin exchange-traded products.
“It's remarkable to me that it took a court to tell us we had to do it,” Peirce said.
“I started in 2018. That summer, our first Bitcoin exchange product arrived in front of us as a fee. And at the time, it was a long time ago, but we I thought I should have said yes to that.”
Peirce declined to comment on the request for a hold on the Ethereum Spot ETF, saying it is currently under consideration by the SEC.
SEC continues enforcement regulation of cryptocurrencies: Hester Peirce
One of the main barriers in the crypto industry is that the SEC relies on enforcement actions instead of establishing clear regulatory guidelines upfront.
Mr Peirce criticized the authorities' reactive approach and stressed the importance of having clear rules that can be followed, rather than relying on enforcement measures after the fact.
“If you really want to differentiate bad behavior from good behavior, having clear rules for those who want to abide by them is a much better approach than trying to enforce them with a parachute after the fact.”
Peirce called on crypto enthusiasts and policymakers to work together to develop ideas that could be implemented if SEC Chairman Gary Gensler changes his stance on cryptocurrencies.
She mentioned the concept of a token “safe harbor” that would provide basic disclosure requirements and give projects time to achieve decentralization.
This is in line with her previous proposal and a bill introduced by U.S. Representative Patrick McHenry in October 2021 that would allow cryptocurrency startups a three-year period to demonstrate network maturity and decentralization. It is suggested that a safe harbor period be established.
Peirce acknowledges SEC's role in prosecuting fraud
In the conversation, Peirce also acknowledged the SEC's role in prosecuting fraud.
As reported, the SEC clarified that: Enforcement actions for FY2023 The result was approximately $5 billion in fines and refunds to investors.
The total fines imposed between October 2022 and September 2023 were the second-highest on record, according to the SEC.
However, Mr Peirce stressed the need for a balanced debate on regulation, rather than relying solely on enforcement actions.
Meanwhile, SEC Chairman Gary Gensler has recently been a vocal critic of cryptocurrencies, warning of compliance violations in the crypto industry.
Back in September, he Admitted that not all tokens can be determined in advancea significant portion of the cryptocurrency industry is subject to securities laws but remains non-compliant.
“Most of this crypto space is regulated by securities laws, without prejudice to any token, but unfortunately, much of it is also non-compliant,” he said.
