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Who’s a bigger draw at San Francisco Blockchain Week: Don Tapscott, the co-founder of the Blockchain Research Institute and staple keynote speaker, or the disembodied head of a government regulator?
The edge goes to Hester Peirce, SEC commissioner by day and Crypto Mom… at all times. The Securities and Exchange Commission is the type of institution that crypto lovers simultaneously shake their fists at and seek the favor of, but Peirce has been outspoken about the need to create clearer rules for the crypto industry so people can be confident they’re on solid legal ground.
Tapscott opened Epicenter, SFBW’s main event, this morning by name-checking most of the big-name blockchain projects, and some smaller ones, in the kind of obligatory opening to an industry conference for newcomers who don’t necessarily share a collective history.
But the real question most industry watchers have these days is not: “What can blockchain do?” It’s: “What are the rules?”
Turns out that nobody knows, not even rule enforcers like Hester Peirce. Although her fireside chat via video conference was called “SEC Point of View,” the commissioner made it clear at the outset that the views were her own, not the SEC’s. And when asked by the moderator what it was going to take to get a successful exchange traded fund (the famed “Bitcoin ETF”), she said she’d like to know the answer to that as well.
“I think a lot of the concerns that are being raised are concerns that relate more to the underlying asset than to the actual structure of the product, which is what I think we should be looking at,” Peirce said, referring to her four fellow commissioners.
Peirce thinks it’s too easy for regulators to look at an asset, bemoan the fact that it doesn’t look like other market products, and decide to stick with the Howey Test as a framework. “I just don’t share that view,” she said.
Peirce's view is that it’s simply not the SEC’s job to make value judgements on digital assets. “By allowing investor exposure to this asset class, we don’t have to be sticking our stamp of approval on any particular asset,” she said. “We just need to answer the demand from investors for a safe way to access this asset class.” Peirce noted that the thing she continually hears from businesspeople is that they “just want to know what the rules are” so they can operate in the space.
Crypto Mom's mission is to provide “safe harbor” to entrepreneurs in the space during the period between when no one using a network and it is being used routinely. She wants them to be confident that they aren’t running afoul of securities laws during that time. Nonetheless, she said, “I think this space does have some unique characteristics that make it more difficult.”
For instance, she pointed out that any number of regulatory regimes in the U.S. might be implicated in digital assets: the Commodity Futures Trading Commission, the Federal Trade Commission, and even the Federal Communications Commission “because it relates to the Internet.”
Nevertheless, Peirce hopes that the U.S. can establish clear guidelines so entrepreneurs don’t opt for overseas markets with more straightforward—and welcoming—rules:
“If you’re hearing from the regulatory side of the fence all the time that there are all these potential dangers associated with something...if I’m an entrepreneur, if I’m looking for a place to set up shop, it’s probably not going to be that country with regulators saying all those negative things.”