A commissioner with the U.S. Securities and Exchange Commission (SEC) has warned that the securities market regulator has dropped the ball on crypto regulation. “We’re not allowing innovation to develop and experimentation to happen in a healthy way, and there are long-term consequences of that failure,” said the commissioner.
SEC Commissioner Warns of Crypto Regulation ‘Failure’
SEC Commissioner Hester Peirce expressed concern that the United States has let down cryptocurrency 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 mom” for her support of the industry, discussed challenges in the crypto ecosystem from a regulatory standpoint. Firstly, the commissioner mentioned fraud, stating that “There’s a lot of fraud in this space because it’s the hot area of the moment.”
However, she pointed out that what concerns her the most is that the SEC has let down crypto regulations. Pierce said:
The other piece that does concern me is the way that we’ve sort of dropped the regulatory ball.
“We are not allowing innovation to develop and experimentation to take place in a healthy way, and this failure has long-term consequences,” the commissioner warned.
The crypto market has suffered a massive loss over the recent weeks, shedding about $500 billion since the beginning of the month.
The market slowdown was exacerbated by the collapse of the cryptocurrency terra (LUNA) and the stablecoin algorithm terrausd (UST). Both cryptocurrencies lost almost all of their value within days. The disaster prompted Congress to call for the urgent regulation of stablecoins.
Following the implosion of the two cryptocurrencies, SEC Chairman Gary Gensler warned that a lot of crypto tokens will fail and investors will get hurt. He has repeatedly said that a lot of coins listed on crypto exchanges are securities and should be registered with his agency. However, Gensler also emphasized that the SEC does not have enough resources to adequately police financial markets, stating that the regulator is really “outpersonned.” He also said that crypto exchanges are trading against their customers often.
The SEC under Gensler has so far been focused on law enforcement. Since the securities watchdog launched a dedicated unit to monitor crypto assets in 2017, it has filed more than 80 lawsuits against crypto companies. The agency recently announced that it will nearly double the size of its Enforcement division’s crypto unit.
Peirce emphasized the need for regulatory clarity from the SEC, adding that there is a lot of work to be done within existing authorities. Citing that traditional financial institutions want to get involved in crypto, she stressed: “They need regulatory clarity from us in order to do that.”
The commissioner said:
We can fight fraud and we can play a more positive role on the innovation side, but we have to get there, we have to get to work…I haven’t seen us ready to do that work so far.
