By CCN: ‘Crypto Mom’ and SEC commissioner, Hester Peirce, has extended yet another olive branch to the cryptocurrency community.
Speaking at the Securities Enforcement Forum in California on May 9th, Peirce said officials should be wary of stifling creativity with overzealous regulation. However, she also suggested a lack of regulation could have a similarly negative effect on the crypto space.
According to Peirce, the responsibility now falls solely on the SEC to apply clear guidelines to the still nascent industry.
‘Crypto Mom’ Hester Peirce: ‘Don’t Smother Crypto In Its Infancy’
Peirce once again exemplified her reputation as the ‘Crypto Mom’, as she expressed fears that the heavy-handed SEC would stifle cryptocurrency’s development. She said:
“I also expressed my concern that the SEC would lead with its enforcement powers, thus allowing anxiety about the risks of new technology to overshadow the opportunities it presents. I worried that hasty regulation would smother the industry in its infancy.”
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The commissioner expressed regret that the SEC hasn’t acted sooner in the crypto space. Not because she’s desperate to see a clampdown, but rather, Peirce recognizes the damage done already due to lax regulations.
“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.”
Indeed, the actions of a few bad eggs (BitConnect, et al) have already tainted the industry to some extent. Furthermore, many sketchy altcoins have appeared in recent years which, although less obvious, carry the sour odour of a scam.
The SEC Has Failed the Public?
Hester Peirce suggested the SEC had failed in its duty to protect the public. She said the lack of clarity on the part of the commission had resulted in people not knowing how to comply with their laws – even if they wanted to. Peirce said:
“It is therefore our duty as a regulator to provide the public with clear guidance as to how people can comply with our law. We have not yet fulfilled this duty.”
Speaking of the Howey Test, which acts as a fundamental guideline for testing security issuances, Peirce offered some hope for ICO investors. Howey states that if investment profits are dependant on the performance of an individual or company, then the shares or tokens in question must be classed as securities.
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But the Crypto Mom says there are instances where investment returns are not necessarily dependant on the performance of others. She said:
“In practice, as interpreted by the courts and the Commission, profit need not be solely from the effort of others.”
That’s in stark contrast to the words of SEC Chairman Jim Clayton. Speaking at a senate hearing in 2018, Clayton offered a more pessimistic view of the ICO arena. He said:
“I believe every ICO I’ve seen is a security.”
A Split In the Regulatory Camp?
Clayton updated his view of ICOs later in the same year when he admitted that ‘not all ICOs were fraudulent’ – but that says nothing about security status.
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Crypto Mom, Hester Peirce, meanwhile has taken a very conciliatory approach to the cryptocurrency space. Since being sworn in to the Securities and Exchange Commission by President Donald Trump in January 2018, Peirce has been more welcoming to cryptocurrency than many of her cohorts at the commission. She even publicly voiced her disagreement with the SEC’s decision to reject the Winklevoss Bitcoin ETF in July 2018.