Markets
‘I’m not your mother’ – DL News
- The outspoken cryptocurrency advocate spoke about her career at the SEC.
- She discussed elections, “frustration” in some SEC cases, and Stoner Cats.
Securities and Exchange Commissioner Hester Peirce is happy to talk about cryptocurrency innovation.
Just don’t call her “crypto mom”.
Peirce has earned the affection of the cryptocurrency industry — and the nickname “crypto mom” — for her support of the industry and her fierce dissent over proposed rules and lawsuits filed against the industry under Chairman Gary Gensler.
Still, the libertarian-leaning Peirce says he approaches cryptocurrencies as a choice American consumers should be able to make for themselves.
“I find it funny, but at the same time, I have a little problem with the term ‘mother,’” the commissioner said. counted DL News in an interview last week.
“I’m not your mom.”
DL News spoke with Peirce about the SEC’s crackdown on cryptocurrencies, cryptocurrency exchange-traded funds, and the upcoming election.
A new chair
Some suggested that Peirce — one of two Republican SEC commissioners — could be its next chairman if Donald Trump is elected president in November.
Join the community to receive our latest stories and updates
This would be a boon for the cryptocurrency industry, for whom Gensler has become an iconic foe.
Gensler’s term runs through 2026, but SEC chairs tend to step down sooner if a new administration takes over.
“If the chairman changes, typically the SEC chairman changes in response to that,” Peirce said.
The position is powerful.
The president sets the agency’s agenda and does so independently of the executive branch—which is not necessarily the case for all federal regulators.
Asked about succession at the SEC, however, Peirce made no predictions.
“It could be anyone — the president has wide latitude” to choose, she said.
Cryptocurrency Laws
Some politicians are convinced that crypto voters could influence battleground states in the November election.
Likewise, lawmakers have realized that they need to act quickly to pass cryptocurrency legislation.
The FIT21 Act — which creates a market framework for cryptocurrencies — was passed by the House of Representatives in May.
The bill would give the SEC’s sister agency, the Commodity Futures Exchange Commission, more authority over spot cryptocurrency markets.
Gensler and his CFTC colleague Rostin Behnam work closely together. But they clearly disagree on one issue — while Gensler says most cryptocurrencies are securities, Behnam claims they are commodities.
The SEC and CFTC ‘need to take a step back and remember that we both serve the American people.’
— Hester Peirce
Peirce said he doesn’t see the SEC’s relationship with the CFTC as a rivalry and was happy to see Congress working to decide where to allocate authority.
“We need to take a step back and remember that we serve both the American people and American markets. We should be thinking about who is best to do function x or y — as Congress has instructed us,” she said.
Legislation in this sector should take into account that potential innovation has nothing to do with cryptocurrency’s status as a financial asset, she said.
“There’s a lot going on in cryptocurrencies that has nothing to do with financial markets,” Peirce said.
Decentralized physical infrastructure, for example, does not fit neatly into a financial legal framework.
Regulations by enforcement
Crypto lobbyists say they want regulation because, in the absence of it, the SEC must resort to enforcement.
The Supreme Court recently gave hope to cryptocurrency litigators.
In a historic reversal of the so-called Chevron doctrine, the court essentially made it easier for judges to overrule regulators in cases where statutes are unclear.
Peirce said the agency was “still processing” what impact the decision could have on its cases.
She said, however, that she has always focused on following Congress’s intentions.
“We have to strictly follow what Congress has told us to do,” she said.
The SEC must ensure that it is following the authority Congress gave it and not “trying to adopt overly aggressive interpretations.”
Peirce did not comment on open cases — the agency is currently suing exchanges Coinbase, Binance and Kraken, among others.
But she said the SEC’s court victory against blockchain publishing company LBRY was a low point in her career as commissioner.
“This was a project where a lot of really substantial work was done, and yet we decided to sue and ended up basically shutting it down,” she said.
The SEC alleged that LBRY had violated securities laws.
“There were no allegations of fraud — it was a registration violation — and that struck me as problematic,” Peirce said.
A lawsuit against nonfungible token project Stoner Cats, which was settled by the parties, felt arbitrary, Peirce said.
“If we had applied similar logic in other contexts, we might be bringing lawsuits against all sorts of issuers of non-digital collectibles,” she said.
Unlike Gensler, who has an oft-repeated maxim that crypto companies just need to “go to the SEC and register,” Peirce said it is difficult for crypto companies to get help from the regulator.
“There is a real need for widespread guidance, and we could have spread it and helped these two projects, as well as many others,” she said.
ETF Approvals
Investors are eagerly awaiting the SEC to approve Ethereum ETFs, which Gensler said will likely happen this summer.
Peirce declined to comment on whether the SEC will approve Solana ETF applications.
But she said cryptocurrency ETFs should be treated the same way.
“That was my big frustration with the Bitcoin ETF saga. We went back and forth for 10 years” with issuers, she said until a court essentially ruled that the SEC had to allow ETFs.
“We just needed to apply the same rules we apply to other things and look at the facts and circumstances of each application.”
She cautioned, however, that the SEC’s green light does not mean the product is safe.
“Investors have different risk tolerances, different things they’re looking for, different portfolios. Their time horizons are different,” she said.
After all, she’s nobody’s mother — she’s not telling anybody how to invest.
“You as an individual can make choices for yourself and your family better than anyone else because you know your circumstances better, you know your dreams better,” she said.
“Too often, we as regulators step in and say, ‘I’m going to tell you what to do with your life.’”
Contact the author at joanna@dlnews.com.