SEC commissioner Hester Peirce remarked during a virtual conference appearance last week that “evidence-based rulemaking is not yet the norm in crypto-regulation” as part of a wider exploration of the topic.
Peirce spoke on March 15 during an event organized by the British Blockchain Association. According to a transcript of her speech, Peirce once again outlined an expansive and positive viewpoint on cryptocurrencies, noting in her speech authorities perhaps spend too much time focusing on the “illicit” use of the technology compared to its potential benefits.
“Perhaps, government officials should pause to consider the flip side of crypto—its value in protecting people from illicit activity,” Peirce said. “Because of its ability to reach people without intermediaries and its ease of storage, transport, and access, crypto can be an important part of the survival story of people living under the threat of harm by their families, people in their communities, or repressive governments.”
This line of thinking, according to Peirce, is reflective of a broader issue in the realm of crypto regulation in the U.S. today:
“The disproportionate focus on illicit uses and the underestimation of the protective uses of crypto is one example of how evidence-based rulemaking is not yet the norm in crypto-regulation. We can do better, and I hope that this year will mark a turning point for the United States, which in turn may spur other countries similarly to take a more sensible approach to crypto regulation. The SEC faces several challenges and corresponding opportunities in regulating blockchain-based assets and technologies. While the specifics will not be the same for other jurisdictions, some of the general regulatory principles likely are applicable despite jurisdictional differences.”
As might be expected, Peirce honed in on bitcoin exchange-traded products during her speech, an area of significant interest given the growing number of companies attempting to gain approval from the SEC and the past reluctance from the U.S. securities regulator to give the nod to such products. Today’s scrutiny comes as bitcoin ETPs gain traction in Canada and abroad.
She critiqued “ever-moving goalposts” in the SEC’s consideration of bitcoin ETPs, noting that such conditions are “unfair to innovators who spend ever-increasing amounts of money on attorneys and quantitative experts only to find that they have failed to hit a target that has moved once again.”
“Regulators should commit themselves to providing regulatory clarity so that traditional financial market participants can engage with crypto with confidence that they are complying with their regulatory obligations,” she later said.
The speech suggests Peirce holds the view that growing interest from institutional investors will become a growing pressure point on the SEC in its decision-making on crypto issues.
As she told event attendees:
“The pressure on us to grapple with the difficult questions through rulemaking and guidance will intensify rapidly along with institutional interest in crypto. Legacy financial institutions and traditional investors that have sat on the sidelines until now are likely to push us to allow them to play a more active role. Meanwhile, some crypto-native firms are now large companies that are woven into the fabric of the broader economy and so also will command more regulatory attention.”
“A final regulatory lesson then is that the regulatory work is only just beginning,” she went on to say.