Cryptocurrency laws in the United States should be "reserved" and not regulate the technology as if all uses were financial, argues a commissioner of the United States Securities and Exchange Commission.
On June 29, Commissioner Hester Peirce, nicknamed "Crypto Mom," appeared remotely in Australian Blockchain Week and was asked how he would regulate cryptocurrencies, answering:
"I think we need to make sure that whatever regulatory framework you have doesn't assume that everything is a financial asset."
Peirce explained that cryptocurrencies are considered in “very financial terms” there are other uses such as allowing people to interact without the need for a centralized entity.
"That's useful in the financial context, but it's also useful in building a social media platform or anything else," he said.
Protecting investors is important, but the government must have a good reason to prevent people from investing their own money however they want: https://t.co/QgPm38iSrp
—Hester Peirce (@HesterPeirce) June 27, 2023
Peirce believes that any legal framework should take "a reserved approach" but include "enough clarity so that people feel they can prove things."
“There is something to be said for not establishing a framework that is so inflexible that it will not accommodate new uses of cryptocurrency and blockchain.”
In an apparent blow to the SEC's current approach, which many have criticized including Peirce — the commissioner said that the laws “cannot be reserved so, all of a sudden, [regulators] come five years later with a bunch of enforcement actions.”
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When asked about his defense of cryptocurrency, Peirce said he thinks the SEC "can do better" and believes that if it can't speak freely, "then I don't know why I'm in that position."
“Crypto presents [the SEC] an opportunity to rethink how we approach innovation [...] I really think we have been taking an approach that is not appropriate," he said.
Alluding to the collapse of FTX and the misconduct allegations Next, Peirce advised the crypto industry to self-regulate and pay attention to counterparty risks, conflicts of interest, and leverage.
"Those are things you don't need a government regulator to tell you to do, but I think government regulators can play a role in that."
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