Hester M. Peirce, a member of the Securities and Exchange Commission, is worried that the regulator is moving too slowly for the crypto ecosystem.
Addressing fellow regulators at the Securities Enforcement Forum in Palo Alto, California (the heart of Silicon Valley) on Monday, Peirce said that one year ago she was concerned that the SEC “as one of [the token market’s] potential regulators, would stifle its growth.”
She wryly added: “I will admit today that I was very wrong, not about whether the SEC would stifle the industry’s growth—it has—but in how it would do it.”
Rather than being heavyhanded in enforcing the rules as she feared, the agency has instead been too sluggish to clarify or update them, Peirce explained:
I worried that hasty regulation would smother the industry in its infancy. My concerns did not become reality. The enforcement actions we have taken to date in the crypto space have—for the most part—exhibited appropriate restraint. On the regulatory side, “hasty” is not the word I would use to describe the SEC’s pace. It is not the SEC’s overzealous action that has stifled the crypto industry, but its unwillingness to take meaningful action at all.
Her primary concern is that while the SEC has done a great deal to reach out to fast-moving startups, the tools it uses to assess when regulations apply – including the Howey test for determining whether something meets the definition of a security – are still dangerously out-of-date.
To be sure, Peirce credited the SEC for being open and forward-thinking about communicating with startups. The SEC’s FinHub network has been leading in startup outreach and most recently held a meetup in Denver where blockchain companies came to speak directly with regulators.