A commissioner with the U.S. Securities and Exchange Commission (SEC) says that true decentralized projects pose a challenge to crypto regulation. Noting that “decentralized finance in itself carries a certain capacity for self-regulation”, said the Commissioner, “we have to take this into account when we design a regulatory system”.
SEC Commissioner Peirce Discusses Crypto Regulation and Decentralized Finance
SEC Commissioner Hester Peirce talked about cryptocurrency regulation in an interview with Yahoo Finance, published last week. Peirce is also known in the crypto community as a “crypto mom” for her knowledge and support of the crypto space.
She was asked about whether the SEC has any trouble catching up with developments in the crypto space and protocols which are advancing and changing very quickly on a daily basis.
“It is certainly difficult for a regulator to stay abreast of developments in terms of the challenge [decentralized finance] and crypto more generally, ”Peirce admitted. However, she noted:
People shouldn’t assume that the SEC can only focus on one thing. The SEC has a lot of resources and can handle a lot of things simultaneously.
“So, be aware of that, and you need to be thinking about whether the securities laws apply to what you’re doing and consulting with lawyers when necessary,” she recommended.
The Commissioner added: “The decentralized world is a very new world for us as we are used to dealing with large centralized intermediaries, usually large. So true decentralized projects do pose a challenge.” Peirce warned:
I think what I’d like to warn people about is that sometimes something claims to be decentralized and isn’t, and there is in fact a centralized entity, and I think regulators will definitely look to that. centralized entity.
SEC Chairman Gary Gensler also similarly said that many platforms claiming to be decentralized were actually centralized. He told Senator Elizabeth Warren in September that many platforms “are decentralized only by name”, citing that “there is a user agreement”. In addition, he said many tokens listed on cryptocurrency exchanges are actually securities, telling Congress that they needed more regulation.
Peirce explained further:
Decentralized finance carries within itself a certain capacity for self-regulation. And I think we need to take that into account as we design a regulatory system.
Commenting on cryptocurrency regulation, the Commissioner said: “It baffles me that for three years now I have been asking for regulatory clarity and we cannot provide it.”
She added: “I think this is really becoming a huge barrier to this industry being able to develop in the way that’s safe but also in a way that allows innovation to happen. And it’s a shame for me that we don’t just take on the role of regulators to develop a regulatory framework.
