Securities and Exchange Commission member Hester Peirce recently said that regulators need to be careful about how they approach cryptocurrency regulation, noting that it’s not their job to determine the merit of any given investment opportunity. The commissioner's remarks came during a wide-ranging speech on regulation at the University of Missouri School of Law on Friday, February 8.
Commissioner Peirce told her audience:
There is also great interest in exchange-traded products based on bitcoin or other cryptocurrencies. As I have mentioned in the past, I am concerned that our approach with respect to such products borders on merit-based regulation, which means that we are substituting our own judgment for that of potential investors in these products.
We rightfully fault investors for jumping blindly at anything labeled crypto, but at times we seem to be equally impulsive in running away from anything labeled crypto. We owe it to investors to be careful, but we also owe it to them not to define their investment universe with our preferences.
Peirce also expressed concerns about regulators’ reliance on enforcement actions in recent years and called on her fellow commissioners and Congress to provide greater clarity for the industry. She noted the work being done by Congressmen Warren Davidson and Darren Soto, whose recently-introduced bill would amend existing securities laws to ensure that digital assets are defined as a separate asset class.
Commissioner Peirce said that she understands why this is frustrating for so many innovators, but urged them to interact with her and other SEC commissioners to help them get the right regulatory framework in place:
“Channel that frustration by coming and talking to us about how you think we should approach these regulatory questions. Sometimes I feel like the repairman in the ATM sending slips of paper to the outside world asking for help. In my case, I am asking for help on getting the regulations right so that innovators and entrepreneurs can spend their time and attention on making better products, providing better services, and revolutionizing the way we interact with one another.”