Hester Peirce Advocates for Crypto Regulation Reforms
As the cryptocurrency landscape continues to evolve, U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce is advocating for significant reforms in crypto regulation. Speaking at the Third Annual Conference on Emerging Trends in Asset Management held in Washington, D.C., on June 5, Peirce emphasized the need for a more supportive regulatory framework that could fuel the adoption of digital assets.
Current Regulatory Inefficiencies
She criticized the current regulatory inefficiencies, particularly the SEC’s slow approval process for spot bitcoin and ether exchange-traded products (ETPs), which have often required judicial intervention for advancement. Peirce argues that instead of acting as gatekeepers, regulators should strive to be enablers of innovation in the crypto space.
Need for Enhanced Clarity and Guidance
Peirce highlighted the importance of establishing a consistent regulatory framework that benefits both the industry and the SEC staff. By standardizing approaches towards ETPs, she believes the burdens on compliance could be significantly reduced. During her address, she underscored the need for enhanced clarity in regulatory guidance to empower investors’ access to crypto assets.
“Providing additional guidance could broaden investor opportunities and allow for greater diversification in portfolios,”
she stated, adding that the SEC is currently working on clarifying regulations for investment advisers and companies, which would alleviate existing uncertainties.
Challenges in Custody Regulations
A significant topic Peirce brought up was the ambiguity surrounding the status of state-chartered limited purpose trusts acting as custodians under both the Investment Company Act and the Investment Advisers Act. This uncertainty has created challenges for funds and advisers attempting to comply with regulations. However, she expressed optimism regarding changes that may emerge, citing a recent rescission of Staff Accounting Bulletin No. 121 and clarifications from federal banking regulators, including the Office of the Comptroller of the Currency (OCC).
The Future of Custody Options
Peirce articulated a hope that the SEC’s Division of Investment Management could provide clearer guidelines on how state trusts may operate as banks concerning crypto asset custody. She emphasized that expanding custody options and enhancing regulatory transparency are crucial for fostering innovation while simultaneously protecting investors.
She proposed that the discussion around custody requirements should evolve to prioritize principles that address the unique risks associated with digital assets rather than merely sticking to the idea of “qualified custodians.”
Call to Action for SEC Commissioners
In her call to action, Peirce encouraged her fellow SEC commissioners to directly tackle these systemic issues. She stressed the necessity for more durable regulatory clarity to unify traditional finance with developing blockchain technologies, advocating for a proactive stance from the SEC that bolsters innovation and empowers investors within the burgeoning digital asset market.
