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SEC Commissioner Hester Peirce, popularly referred to as Crypto Mom, addresses the regulatory ambiguity surrounding crypto classification during a recent congressional hearing.
Yesterday’s hearing saw five SEC commissioners, Gary Gensler, Hester Peirce, James Lizarraga, Mark Uyeda, and Caroline Crenshaw, testify before the U.S. House Financial Services Committee. As reported earlier, this landmark event marked the first time since 2019 that all SEC commissioners testified before Congress.
Peirce Criticizes SEC Over Its Imprecise Language
During the hearing, Peirce criticized the SEC for using imprecise language to create confusion about whether a token itself is a security or part of an investment contract. According to Crypto Mom, the agency’s continuous use of imprecise language has wrongly suggested that the token itself is a security.
She emphasized that this lack of clarity affects how the token can be traded in the secondary market and who can list it. Notably, Crypto Mom slammed the commission for neglecting its duty by not being precise with industry stakeholders.
SEC Should Have Admitted Long Ago That Crypto Tokens Aren’t Securities
Interestingly, Peirce referenced the SEC’s comment in the Binance lawsuit, in which the agency apologized for the confusion it created through its use of the term “crypto asset securities.”
Earlier this month, the SEC admitted in a footnote that the term does not imply that crypto assets are securities themselves but a shorthand for the sets of contracts and expectations surrounding the distribution of the token.
Reacting to the comment, Peirce said the SEC should have admitted earlier that the token itself is not a security.
JUST IN: 🇺🇸
SEC Commissioner Hester Peirce says the SEC "should have admitted long ago" that crypto tokens are not securities. pic.twitter.com/T8r5mOpdIN
— Radar🚨 (@RadarHits) September 24, 2024
SEC Treats Digital Assets Differently from Physical Ones
Rep. William Timmons questioned Peirce about non-fungible tokens (NFTs), specifically asking whether the commission views physical arts as securities. Responding, Peirce said no, prompting Timmons to express concerns about the implications if the SEC categorizes NFTs as securities.
In response, Peirce expressed worries about how the SEC has treated digital assets differently from physical assets, finding this approach problematic.
It’s Not Feasible for Crypto Firms or Issuers to Register With The SEC
Meanwhile, Congressman Zach Nunn quizzed Peirce whether it is feasible for crypto-related companies and issuers to “come in and register” with the SEC.
In response, Crypto Mom emphasized that it is not feasible realistically, noting that only a few firms have been successful with registration.
Commissioner Uyeda Says SEC Rulemaking Condition Is Below Average Under Gensler
The lack of regulatory clarity for the United States crypto industry has raised concerns among investors and policymakers.
Congressman Mike Lawler voiced this concern during the recent congressional hearing when he asked Uyeda whether he believes the SEC has lost its “gold standard” under Gensler’s leadership.
Commenting, Uyeda expressed disappointment with the current situation at the SEC, noting that he has served under six chairpersons over the years. According to him, the SEC’s current state of rulemaking is below average, suggesting that the commission’s reputation has declined drastically.
When asked to address Uyeda’s criticism, Gensler acknowledged that they both have different policy-making views. Nonetheless, Gensler noted that the comment summaries that Uyeda refers to are available to the public, adding that the commissioner also “gets those well in advance of a vote.”