‘Crypto Mom’ Hester Peirce Urges Rethinking of Regulatory Approach

U.S. Securities and Exchange Commissioner Hester Peirce is suggesting a balanced and cautious approach to cryptocurrency regulation in the country, stressing that the regulatory framework should not automatically categorize every crypto use as a financial asset. It is not the first time that she has called out for reform.

Speaking virtually at Australian Blockchain Week on June 29, Commissioner Peirce, affectionately known as “Crypto Mom”, voiced her views on cryptocurrency regulation. She argued that the existing perception of crypto is typically financial in nature, overlooking its other potential applications, such as its ability to facilitate interaction without the necessity of a centralized entity.

Highlighting the broader usability of crypto technology, Peirce stated, “That’s useful in the financial context, but it’s also useful in building a social media platform or whatever else.” She underscored the importance of a regulatory framework that, while providing ample clarity for new ventures, remains flexible enough to accommodate the rapidly evolving crypto and blockchain landscape.

Peirce expressed her belief that any regulations need to be consistent and not overly strict, stating, “There is something to be said for not putting a framework in place that is so inflexible that it doesn’t accommodate the new uses of crypto and blockchain.”

In a critique of the current regulatory stance of the SEC, which she and others have criticized, Peirce emphasized that regulatory enforcement should not be imposed suddenly, years after the initial reservation.

Responding to queries regarding her advocacy for cryptocurrency, Peirce argued for the SEC to adopt a more effective approach. She asserted her freedom of expression, arguing, “then I don’t know why I’m in that position” if she is unable to voice her opinions openly. She continued, “Crypto presents [the SEC] an opportunity to rethink how we approach innovation […] I really think we’ve been taking an approach that is not appropriate.”

Drawing on the aftermath of FTX’s collapse, Peirce advised the crypto industry to engage in self-regulation, taking into consideration counterparty risks, conflicts of interest, and leverage. She concluded that, “Those are things you don’t need a government regulator to tell you to do, but I think government regulators can play a role in that.”