SEC Commissioner Hester M. Peirce said the SEC should regulate digital assets through rule-making, asserting it would provide more regulatory clarity for the cryptocurrency industry.
“If we continued with our regulation-by-enforcement approach at our current pace, we would approach 400 years before we got through the tokens that are allegedly securities,” Ms. Peirce said Jan. 20 at the Digital Assets at Duke conference, hosted by Duke University. “By contrast, an SEC rule would have universal — albeit not retroactive — coverage as soon as it took effect.”
Congress has yet to reach an agreement on how to regulate the cryptocurrency industry, though several crypto regulation bills were introduced last session. Now that a new Congress is in session, these bills will need to be reintroduced. One bill introduced in August, the Digital Commodities Consumer Protection Act, would give the Commodity Futures Trading Commission the authority to regulate the trading of digital commodities.
If the SEC did pursue rule-making for digital assets, Ms. Peirce noted, “we would have to admit that we likely need more, or at least more clearly delineated, statutory authority to regulate certain crypto tokens and to require crypto trading platforms to register with us. And Congress might decide to give that authority to someone else.”
However, she argued that the SEC could “do the job well,” specifically when it comes to creating federal disclosure rules for tokens and serving as a federal regulator for trading platforms.
Ms. Peirce also said “the CFTC’s retail experience is more limited than the SEC’s,” but reiterated that Congress holds the power to decide who has regulatory authority over digital assets.
Since the collapse of FTX, many lawmakers have voiced their concerns about the crypto industry.
“My fear is that we’ll view Sam Bankman-Fried as just one big snake in a crypto Garden of Eden. The fact is crypto is a garden of snakes,” said Rep. Brad Sherman, D-Calif., in a House Financial Services Committee hearing last month.
However, Ms. Peirce said, “we should remember that new technologies sometimes take a long time to find their footing,” and the future of the crypto industry will depend on what the markets have to say.
“The SEC’s job is not to predict innovation or to manage it, but to set out a framework within which people can use their ingenuity to set the course for their and their children’s future,” she said.