Commissioner Hester Peirce, aka “Crypto Mom”, who issued a dissent last year to the SEC’s rejection of the Winklevoss Bitcoin ETF proposal, continues to urge her colleagues to foster crypto innovation without regulatory overreach.
In a recent tweet, she reaffirms her position that the US Securities and Exchange Commission is not a “merit regulator” issuing seals of approval, a point Peirce tried to drive home in her official 2018 dissent. She continues to draw the line over too much coddling by regulators.
I look forward to working with you @SECJackson to open the doors to innovation, but we're not a merit regulator issuing seals of approval, so let's encourage investors to do their own work to decide whether an investment is right for them: https://t.co/iMA7NUkLRp
— Hester Peirce (@HesterPeirce) February 7, 2019
While SEC Commissioner Robert J. Jackson Jr. says he believes a Bitcoin ETF will eventually satisfy the Commission’s minimum requirements, earning an approval, he says the road to the “deepest and most liquid capital markets in the world” is hard, and that the approval process should be hard. Closing the door on the Winklevoss ETF, for example, was not a difficult case.
“So there you had a situation where the risk for manipulation and for people getting hurt was enormous. The liquidity issues in the market were very serious.
“I come to this job thinking about my mom and dad. Would I have wanted them to be able to buy that ETF? Hell no. Hell no. And I might not be sitting here if my father had, so, yeah, I take really seriously putting the American stamp of approval on any investment product. I’m not going to do it until those questions get answered.”
“Once we put the stamp of the United States Securities and Exchange Commission on an investment, once we make it available to everyday mom and pop investors, we are taking risks that Americans can get hurt.”
As for mom and pop investors, Peirce says consumers should be allowed to do their own research regarding cryptocurrencies.
Speaking at the University of Missouri School of Law, Commissioner Pierce also outlined some of the challenges regulators are facing. At the core of the issue is how governments and policymakers define cryptocurrencies.
Peirce clarifies the distinction between securities that should be regulated by the SEC and digital tokens that are used to transfer value and data, and should fall outside of the Commission’s purview.
“When the tokens are not being sold as investment contracts…they are not securities at all. Tokens sold for use in a functioning network, rather than as investment contracts, fall outside the definition of securities.”
The “Token Taxonomy Act”, proposed by Congressmen Warren Davidson and Darren Soto, supports similar logic. Designed to stop an exodus of blockchain developers, the bill stipulates that if a token has utility, and if it doesn’t sell ownership in any company, it’s not a security, and thus falls outside of securities regulations.
Image via Wikimedia