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Hester Peirce to SEC: Wake Up to the Future
Moreover, Peirce is concerned that the murky regulatory framework in the United States will chase crypto businesses offshore.
“[The SEC has the attitude of] ‘I don’t like that marketplace. Bitcoin markets are messy, so we don’t like them. So we’re not going to allow that product that’s based on bitcoin to trade in our markets.'”
Peirce says that’s the arcane attitude the SEC has adopted toward bitcoin, and it’s counterproductive. The Crypto Mom made the remarks at a June 25 forum hosted by the Heritage Foundation (video below).
Peirce says other financial products are also “messy” but the SEC doesn’t pull the plug on them, so why can’t it adopt the same open-mindedness toward crypto?
Crypto Mom: SEC’s Inflexibility Stifles Growth
Hester Peirce is one of five commissioners at the Securities and Exchange Commission. They each have differing opinions on cryptocurrencies. Peirce was affectionately nicknamed “Crypto Mom” because of her embrace of digital currencies.
In July 2018, Peirce was the only SEC commissioner who wanted to approve the bitcoin ETF application submitted by the Winklevoss twins, Tyler and Cameron.
Peirce says her anti-crypto colleagues rejected the Winklevoss twins’ bitcoin ETF application because they’re uncomfortable with new ideas.
She says that’s a terrible attitude that stifles innovation.
The agency is old and has not historically been great with innovation. When a regulator is presented with something new, our safest response is to say, ‘Sorry, why don’t you stick with the old traditional stuff? Because we know how to regulate that.’
That’s not a healthy state of being. We want people to come in with innovation. We want to see change, because those innovations ultimately serve investors well.
SEC Is Divided on How to Regulate Crypto
The rejections — in March 2017 and again in June 2018 — cited the twins’ failure to demonstrate how their bitcoin ETF could prevent market manipulation.
SEC Approval of VanEck Bitcoin ETF Uncertain
In May 2019, the SEC again delayed making a decision on the VanEck bitcoin ETF. So far, it doesn’t appear that approval will occur anytime soon.
Outgoing SEC commissioner Robert Jackson, who’s a crypto skeptic, admits that the agency is divided over how to regulate crypto.
Jackson said the agency will view crypto more favorably when the market becomes more transparent and more liquid.
In 2018, the SEC launched a mass crackdown on shady ICOs, fueling demands for regulatory clarity. Jackson blames overzealous law firms for enabling the proliferation of sham ICOs that tainted the industry.
“Early in this market, some lawyers out on the West Coast got out ahead of their skis,” Jackson says. “They gave advice that these things were not securities.”