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SEC’s CryptoMom Hester Peirce continues to push crypto-friendly regulation


www.chepicap.com 10 February 2019 02:00, UTC
Reading time: ~4 m

US SEC Commissioner Hester Peirce shared her thoughts in regards to the subject of 'Protecting the Public While Fostering Innovation and Entrepreneurship: First Principles of Optimal Regulation' at the University of Missouri School of Law.

Hester Peirce, a Commissioner of the Securities and Exchange Comission, AKA CryptoMom, has repeatedly made headlines in the crypto universe as she is perhaps the most outspoken voice for the approval of a Bitcoin ETF.

Read more: Why does SEC Commissioner Hester Peirce fight for a Bitcoin ETF?

In a speech delivered at the University of Missouri School of Law, Peirce indicated that she continues to push her colleagues on crypto exchange traded products and crypto-friendly token sale regulation.

The SEC Commissioner said that there is 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', she said. 

'This 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.

The SEC owes it to investors to be careful, but it also owes it to investors not to define their investment universe with its own preferences, Peirce added.

'If we act appropriately, we can enable innovation on this new frontier to proceed without compromising the objectives of our securities laws—protecting investors, facilitating capital formation, and ensuring fair, orderly, and efficient markets.'

Read more: SEC Commissioner believes a BTC ETF will be approved eventually

Peirce continued her speech by saying that the SEC's interactions with cryptocurrencies are not limited to questions about the regulation of token sales and disclosures.

'Closely linked to the question of whether tokens are securities is the question of how the platforms on which tokens trade should be regulated.'

'Some of these platforms want to register with us', Peirce said. 'I am eager to make progress on this front.'

'There are features of crypto trading platforms that may differ from exchanges or alternative trading systems designed for traditional securities. To identify how regulation may need to change to accommodate these differences we will need to improve our understanding of how the platforms operate.'

Read more: Will Bitcoin replace fiat money?

When are tokens securities?

The Crypto Mom pointed out that many projects begin in a centralized manner that looks about the same as any other start-up.

'A group of people get together to build something and they need to find investors to fund their efforts so they sell securities, sometimes called tokens', Peirce said.

According to Peirce, the SEC then applies existing securities laws to these securities offerings, which means that they must be conducted in accordance with the securities laws or under an exemption.

'However, when the tokens are not being sold as investment contracts, they are not securities at all', Peirce added.

'Tokens sold for use in a functioning network, rather than as investment contracts, fall outside the definition of securities.'

Read more: SEC Commissioner Hester 'CryptoMom' Peirce calls on the SEC to embrace crypto

Commissioner Peirce made herself known to the crypto community in July 2018 when she famously dissented from the SEC's decision to deny rule changes that would have allowed for a Winklevoss Bitcoin ETF.

Apparently, bitcoin is not ripe enough, respectable enough, or regulated enough to be worthy of our markets. I dissent: https://t.co/gH5zXaKtmj

— Hester Peirce (@HesterPeirce) July 26, 2018

She concluded her speech by saying that she is 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.'

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