To a backdrop of SEC chairman Gary Gensler pronouncing rather bellicose crypto sentiment, fellow SEC commissioner Hester Pierce remains a calm and eminently sensible figure at the US Securities and Exchange Commission. She says that the US should develop clear regulatory guidelines for the crypto industry.
In an interview on CNBC earlier today, Hester Pierce gave her views on the regulatory future for the crypto industry. She believes that a balance should be struck between investors being allowed to “participate in digital assets”, but at the same time having the crypto platforms regulated in order to protect these investors.
The commissioner admits that the law on these digital assets is “rather unclear” and she states that she would like to work on developing a clear framework so that market participants can move forward without worrying about whether they are contravening the law.
When asked how easy it is to lay down a clear framework, Pierce said that she had already put forward a “safe harbour” proposal for comment earlier this year.
She also said that there were “tricky aspects” to a new framework, but that if the SEC were to work with market participants who were very knowledgeable about the technology, then there was a way forward. She added that there were knowledgeable people in the SEC as well.
The interviewer remarked that given the size of the crypto market now, there was a lot of scope for “abuse”, and also a possible “spill over” into traditional markets from the likes of decentralised finance. She asked whether both systems could co-exist, or whether DeFi might be a threat?
Pierce commented that fraud did exist in the crypto space, and that the SEC had carried out appropriate enforcement actions. She added that investors and other market participants really did need to take care, and to be aware of bad actors who would take their money given a chance.
As for the risks to traditional markets, Pierce highlighted that there were “connections” between the two systems, and that the regulators paid a lot of attention to them. She went on to say:
“I think there is also a lot of promise in this industry, and the promise is not only in developing a sort of parallel financial system but also in integrating pieces of the crypto system into the traditional financial system, and I think that there’s a lot of interest in looking for ways that crypto can make our existing financial system serve more people, more effectively, and more safely, and frankly, more resiliently.”
She said that for this to happen, the SEC needed to provide legal clarity so that those in the crypto markets are comfortable participating in them.
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