Congress must determine which regulator has authority over cryptocurrency markets, U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce said Wednesday—as her organization cracks down on crypto companies and market participants seek greater regulatory clarity.
U.S. Lagging Behind on Regulatory Clarity
Speaking at FT's Crypto and Digital Assets Summit, Peirce said "there are questions about who has the authority" to make rules about crypto, which is something that has to be determined by Congress.
Notably, multiple people testified in a congressional hearing about digital assets on Wednesday that there is a desire to split specific responsibilities related to crypto between the SEC and the Commodity Futures Trading Commission (CFTC).
Peirce's comments come amid the SEC crackdown on crypto companies. In the past few months, the SEC has taken action against Coinbase (COIN), Kraken, and Bittrex among others.
SEC Chair Gary Gensler has repeatedly said there is no lack of clarity on rules for crypto platforms, just a lack of compliance.
Peirce's original stance was existing securities laws were flexible enough to handle the emerging sector of crypto assets. However, this view has changed over time.
"What we're trying to do now is apply rules that are really fit for much larger, much more established firms to address a problem that could be addressed much more simply," Peirce said. "For example, if you sell a token that people need, we can do that without having you file a full registration that you would file if you were a public company."
Peirce went on to describe the message behind a recent SEC rule proposal around decentralization for crypto companies: becoming centralized, leaving the U.S., or ceasing to exist. The SEC Commissioner, however, disputed the theory that clear regulation in the U.S. will lead to companies moving offshore in an effort to avoid those regulations.
"If we built a good regulatory regime, people would come," Peirce said. "I think you'll see that with [Markets in Crypto-Assets] MiCA [regulation in Europe], and I think, if the U.S. built one, people would come. And it would enable you to distinguish the bad actors from the good actors because there would be questions if people decided to set up in a jurisdiction with no rules. That's why I think we're shooting ourselves in the foot by not having a regulatory regime in the U.S."
The U.S. can benefit from having the opportunity to watch and learn from the implementation of MiCA regulations in Europe. But Peirce is "not very optimistic about the regulatory system" moving quickly on crypto anytime soon; however, she conceded that Congress is currently working on some potential legislation in this area.