A US Securities and Exchange Commission (SEC) commissioner has warned that the stock market regulator has dropped the ball on crypto regulation. “We are not allowing innovation and experimentation to develop in a healthy way, and that failure has long-term consequences,” the commissioner said.
SEC Commissioner Warns of ‘Failure’ of Crypto Regulation
SEC Commissioner Hester Peirce expressed concern that the US has dropped the ball on crypto regulation in an interview with CNBC on the sidelines of the DC Blockchain Summit this week.
Peirce, who is also known in the crypto community as “crypto mother” for her support of the industry, discussed the challenges in the crypto ecosystem from a regulatory standpoint. First of all, the commissioner mentioned fraud, stating that “There is a lot of fraud in this space because it is the hot area of the moment”.
However, he emphasized that what worries him most is that the SEC has dropped the ball on crypto regulation. Peirce stated:
The other piece that concerns me is the way we have dropped the regulation ball.
“We are not allowing innovation and experimentation to develop in a healthy way, and that failure has long-term consequences,” the commissioner warned.
The crypto market has suffered a massive loss in recent weeks, losing around $500 billion since the beginning of the month.
The market downturn was exacerbated by the collapse of the terra cryptocurrency (LUNA) and the terrausd (UST) algorithmic stablecoin. The two cryptocurrencies lost almost all of their value in a matter of days. The catastrophe has prompted Congress to call for urgent regulation of stablecoins.
Following the implosion of the two cryptocurrencies, SEC Chairman Gary Gensler warned that many crypto tokens will fail and investors will be hurt. He has repeatedly said that many of the coins listed on crypto exchanges are securities and must be registered with his agency. However, Gensler also stressed that the SEC does not have enough resources to adequately police financial markets, stating that the regulator is really “overstaffed.” He also said that crypto exchanges trade against their clients often.
The SEC under Gensler has so far focused on enforcement. Since the securities watchdog launched a dedicated crypto asset oversight unit in 2017, it has launched more than 80 enforcement actions against crypto firms. The agency recently announced that it will almost double the size of the crypto unit of its Enforcement Division.
Peirce emphasized the need for regulatory clarity from the SEC, adding that there is much work to be done within the existing authorities. Citing that traditional financial institutions want to get involved in crypto, he emphasized: “They need regulatory clarity from us to be able to do that.”
The commissioner opined:
We can go after fraud and we can play a more positive role on the innovation side, but we have to get to that, we have to get to work… I haven’t seen ourselves willing to do that work until now.
What do you think of SEC Commissioner Peirce’s comments? Let us know in the comments section.
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