Congress must determine which regulator has authority over cryptocurrency markets, U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce said Wednesday, as her organization cracks down on cryptocurrency companies and market participants seek greater regulatory clarity.
US lagging behind on regulatory clarity
Speaking at the FT Crypto and Digital Assets Summit, Peirce said that โthere are questions about who has the authorityโ to set rules on crypto, which is something for Congress to determine.
In particular, several people testified at a congressional hearing on digital assets on Wednesday that there is a desire to split specific responsibilities related to cryptocurrencies between the SEC and the Commodity Futures Trading Commission (CFTC).
Peirce's comments come amid the SEC's crackdown on cryptocurrency firms. In recent months, the SEC has taken action against Coinbase (CURRENCY), Kraken and Bittrex, among others.
SEC Chairman Gary Gensler has repeatedly said that there is no lack of clarity in the rules for crypto platforms, just lack of enforcement.
Peirce's original stance was that existing securities laws were flexible enough to handle the emerging sector of crypto assets. However, this view has changed over time.
"What we're trying to do now is apply rules that really fit much larger, more established companies to address a problem that could be addressed much more simply," Peirce said. โFor example, if you sell a token that people need, we can do it without you submitting a full registration that you would submit if you were a public company.โ
Peirce went on to describe the message behind a recent SEC rule proposal on the decentralization of cryptocurrency companies: centralize, leave the US, or cease to exist. However, the SEC Commissioner disputed the theory that clear regulation in the US will lead companies to move abroad in an effort to avoid those regulations.
"If we build a good regulatory regime, people would come," Peirce said. "I think you'll see it with [Markets in Crypto-Assets] Mica [regulation in Europe], and I think if the United States built one, people would come. And it would allow you to distinguish the bad from the good because there would be doubts if people decided to settle in a jurisdiction without rules. That's why I think we're shooting ourselves in the foot by not having a regulatory regime in the United States."
The US can benefit from having the opportunity to observe and learn from the implementation of MiCA regulations in Europe. But Peirce is "not very optimistic about the regulatory system" moving fast in crypto anytime soon; however, he conceded that Congress is currently working on some potential legislation in this area.
