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Hester Peirce, Commissioner for the U.S. Securities and Exchange Commission (SEC), highlighted the urgent need for legislative resolution on the regulatory authority over cryptocurrency markets. This comes in the wake of ongoing SEC enforcement actions against crypto entities and increased demands for clearer regulations from market participants.
Crypto Regulations: U.S. Falling Behind
While participating in the FT's Crypto and Digital Assets Summit, Peirce emphasized the necessity of congressional intervention to clarify which body holds the power to regulate crypto. The issue is currently mired in ambiguity.
Intriguingly, several testimonies from a recent congressional hearing on digital assets proposed the idea of dividing crypto-related regulatory responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC).
These statements coincide with the SEC's escalating scrutiny of crypto businesses. In recent months, Coinbase, Kraken, and Bittrex have all faced SEC enforcement actions.
Despite this, SEC Chair Gary Gensler maintains that the rules for crypto platforms are clear, but compliance is insufficient.
Initially, Peirce believed that existing securities regulations were sufficient to oversee the burgeoning crypto asset sector. However, her perspective has evolved.
"We are now attempting to apply rules designed for considerably larger, more established entities to address a situation that could be managed more straightforwardly," Peirce noted. She suggested a simpler approach: "If you're selling a token that's needed, we could facilitate that without requiring the same full registration as a public company."
Peirce further discussed a recent SEC rule proposal concerning decentralization for crypto firms. It pointed towards three options: centralization, relocation outside the U.S., or dissolution. However, Peirce disagreed with the notion that a clear U.S. regulatory environment would prompt companies to move overseas to avoid regulations.
Peirce expressed, "If we create a robust regulatory system, it would attract players." She cited the upcoming Markets in Crypto-Assets (MiCA) regulation in Europe as a potential draw and argued that a similar U.S. framework could help separate legitimate players from bad actors. She suggested that a company's choice to establish in a regulation-free jurisdiction might raise red flags. "By not establishing a regulatory regime in the U.S., we're actually hurting ourselves," she asserted.
While the U.S. can gain insights from Europe's implementation of the MiCA regulations, Peirce isn't overly optimistic about swift crypto regulatory progress in the U.S. Nevertheless, she acknowledged ongoing legislative efforts in this area by Congress.
