SEC Commissioner Hester Pierce has called for better crypto regulation in the United States. Peirce, who acts as the head of the crypto task force, addressed attendees at the crypto custody landmark that was recently held in Washington D.C.
In her opening statement, the SEC Commissioner mentioned that financial firms in the United States have been going around crypto in a way that is not so appealing. Peirce likened the act to a children’s game “the floor is lava,” but noted that they were doing it in the dark.
“Children often play a game called “the floor is lava.” The game requires you to leap from one piece of furniture to the next without falling or touching the ground—otherwise, you will be burned by the imaginary molten lava below,” she said.
SEC Commissioner Peirce slams crypto regulation in the US
In her statement, Peirce mentioned that a real-life version of that game is presently happening, relating it to the way the country approaches crypto regulation and crypto custody.
“A D.C. version of this game is our regulatory approach to crypto assets and crypto asset custody in particular. The twist in the regulatory version is that it is largely played in the dark: burning legal lava and no lamps to illuminate the way,” she added.
She added that like in the game, firms that are planning to engage in digital assets must avoid holding it directly because of the unclear regulatory rules in the country. She added that to engage in crypto-related activities, SEC registrants have had to move from one poorly regulated space to another, ensuring that they never touch any digital asset.
Peirce added that the market will likely not develop because brokers do not know how to handle assets, hence leading them to stop facilitating its trade. “If investment advisers do not know which crypto assets are securities, what types of entities are qualified custodians, and whether exercising staking or voting rights will result in custody violations, advisers may not be able to serve their clients’ best interests,” she continued.
Peirce wants a regulatory approach that recognizes assets
In her statement, the SEC Commissioner mentioned that their approach to regulation should cut across differences across several digital assets. “Our regulatory approach should recognize the differences across crypto assets. Qualified custodians exist for some crypto assets, but for others, self-custody might be the safer option,” she said.
She also admitted that any regulatory framework should not stand in the way of self-custody or trading without the use of intermediaries. She mentioned that digital assets were originally created to foster self-custody and trade, noting that there were never supposed to be intermediaries in the sector. She added that the regulatory framework should support this aspect of the market.
SEC Commissioner Mark Uyeda echoed the same sentiment at the event, noting that as SEC registrants continue to work with digital assets, it is important that they have access to custodial options that meet legal and regulatory requirements. He also advised that the agency should consider letting advisers use “state-chartered limited-purpose trust companies” with authorities to hold digital assets as qualified custodians.
Meanwhile, the recently appointed SEC chairman Paul Atkins said that he expects huge benefits from blockchain technology, noting that it is achievable through risk mitigation, transparency, efficiency, and cost-cutting. He added that one of his goals is to ensure that the SEC would be able to facilitate clear rules for digital assets, noting that his predecessor, Gary Gensler, contributed to the uncertainty in the market. He added that he wants to engage with market participants and work with colleagues in President Trump’s administration and Congress to ensure that a framework that is “fit-for-purpose” is established.
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