Forming a single regulator to oversee crypto would not be a panacea for the industry’s regulatory woes, said U.S. Securities and Exchange (SEC) Commissioner Hester Peirce on CoinDesk TV’s First Mover Thursday.
“I certainly understand the impulse to call for one regulator. I have a couple problems with it,” Peirce said. “Typically in Washington, when you build another regulator, all you get is all the existing regulators plus one.”
Among the voices calling for a new, single U.S. regulator to oversee crypto are Coinbase and U.S. Sen. Cynthia Lummis (R-Wyo.).
Peirce – affectionately called “Crypto Mom” by many cryptocurrency enthusiasts for her longstanding support for the industry – has been outspoken about what she sees as the SEC’s failure to provide a working regulatory framework for the crypto industry, and its tendency to regulate by enforcement.
“We have an opportunity to sit down and work with people, many of whom have been very open about their willingness to come in and work with us and develop regulation,” Peirce said. “So far, we’ve really provided very little concrete regulatory progress.”
“What we’ve done instead is we’ve brought one-off enforcement actions,” said Peirce.
Though these enforcement actions have increased under the leadership of SEC Chair Gary Gensler, Peirce pointed out that Gensler’s approach to crypto regulation – which is much more aggressive than that of his predecessor, Jay Clayton, who now works for Sullivan & Cromwell and advises several crypto firms, including Fireblocks – is evidence of Gensler’s desire to draw clear lines for the industry.
“I’m just hopeful that we set our minds to work at building something that makes sense in terms of regulatory clarity, instead of always just falling back on enforcement,” said Peirce.
The SEC looks at NFTs
Non-fungible tokens (NFTs) exploded in popularity in 2021, reaching $22 billion in trading by December.
According to Peirce, the SEC is taking notice.
“Given the breadth of the NFT landscape, certain pieces of it might fall within our jurisdiction,” Peirce told First Mover. “People need to be thinking about potential places where NFTs might run into the securities regulatory regime.”
While Peirce couldn’t say exactly where the SEC’s issues with NFTs might lie, she warned about the fractionalization of NFTs – a growing market which surpassed $215 million in trading in 2021.
“I think that’s an area where people do need to be careful,” Peirce said. “I think we’ll see during 2022 an increasing fractionalization of NFTs because these are valuable assets.”
When will a spot bitcoin ETF be approved?
The ProShares Bitcoin Strategy ETF made history in October as the first bitcoin exchange-traded fund (ETF) to receive approval from the SEC and begin trading.
But the ProShares ETF is a futures ETF – no spot ETF applications have been accepted, and Peirce said the SEC doesn’t appear to be in a hurry to approve any spot ETFs.
“I can’t believe we’re still talking about this as if, you know, we’re waiting for one to happen,” Peirce said. “We’ve issued a series of denials even recently, and those continue to use reasoning that I think was outdated at the time.”
Peirce added that she doesn’t understand the SEC’s reasoning for denying the spot ETF applications, which makes it difficult for her to predict the possibility of a spot ETF approval in 2022.
“Chair Gensler has said he wants to see platforms registering with us,” Peirce said. “So maybe that’s what it takes for a spot product to get approved.”
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