SEC Commissioner Hester M. Pierce said the SEC should regulate digital assets through rulemaking, arguing that it would provide more regulatory clarity for the cryptocurrency industry.
“If we continued at our current rate of regulation-by-enforcement, we would be approaching 400 years before we passed tokens that purported to be securities,” Ms. Pearce said Jan. 20 at the Digital Assets at Duke conference she hosted. by Duke University. “Rather, the SEC rule will have universal, though not retroactive, effect once it becomes effective.”
Congress has yet to agree on how to regulate the cryptocurrency industry, although several crypto regulation bills were introduced last session. Now that the new Congress is in session, these bills must be reintroduced. One bill introduced in August, the Digital Goods Consumer Protection Act, would have empowered the Commodity Futures Trading Commission to regulate the trading of digital goods.
If the SEC were to pursue digital asset rulemaking, Ms. Pearce noted that “we have to admit that we probably need more, or at least more clearly delineated, statutory authority to regulate certain crypto tokens and require crypto trading platforms register with us. And Congress can decide to give that authority to someone else.”
However, he argued that the SEC can “do a good job,” particularly when it comes to creating federal disclosure rules for tokens and serving as a federal regulator for trading platforms.
Ms. Pearce also said the CFTC’s “retail experience is more limited than the SEC’s,” but reiterated that Congress has the authority to determine who has regulatory authority over digital assets.
Since the collapse of FTX, many lawmakers have voiced their concerns about the crypto industry.
“My fear is that we will see Sam Bankman-Freed as just one big snake in the secret garden of Eden. The fact is that crypto is a garden of snakes,” said Brad Sherman, a representative of the US state of California. Financial Services Commission hearings last month.
However, Ms Pearce said “we have to remember that new technologies sometimes take a long time to find their footing” and the future of the crypto industry will depend on what the markets have to say.
“The SEC’s job is not to predict or manage innovation, but to set a framework within which people can use their ingenuity to shape the future for themselves and their children,” he said.