SEC Commissioner Hester M. Peirce on Oct. 12 criticized the agency's approach to regulating cryptocurrency and said the pace of the SEC's rule-making is "very problematic."
"I don't think that the approach that we're taking (to regulate cryptocurrency) is the correct one," Peirce said at the Security Traders Association's Market Structure Conference in Washington.
Based on her meetings with crypto proponents, Peirce said the industry wants more clarity on what the rules are in order to comply.
"And instead, we come in after the fact with enforcement actions," she said, which are sometimes appropriate but worrying when they relate solely to registration violations.
"The role of a regulator is not to be silent about how to comply," she added, and "you can't just use regulation as a tool to shut down the industry."
Peirce's opinions on crypto vastly differ from those of SEC Chair Gary Gensler, who has said numerous times that the crypto space is fraught with noncompliance, and there are already sufficient laws in place that the industry can follow.
Peirce, one of the two Republicans out of the five commissioners, said she is especially concerned about driving activity outside the U.S., which is already happening, as many U.S.-based crypto projects are conducting their business overseas. "I would rather have that innovation happen here," she added.
When asked about the pace of the SEC's rule-making — which many industry groups have criticized for the volume and complexity of proposals introduced — Peirce said, "it's very problematic."
"It is understandable that the chairman of the agency has a lot of ambitions about what kinds of things should change and how those changes should happen," she said. "But if you want to do things right in a regulatory agency like ours, I really think you have to be gradual in how you do things, and you have to really be deliberate and get a lot of input."
While there are valuable comment letters coming in for each proposal, "I'm getting deprived of having the full value of the input that I need" due to a condensed time frame, Peirce said.
If given more time, she said, the SEC would likely receive more substantive comment letters and data to consider for each proposal.
Roundtables are "a very undervalued tool," she added, that the SEC could use "to work through identifying where the real problems are, and then figuring out what reasonable solutions to those problems would be. But again, those take time, and so we're not doing them."
"I would like to spend more time on each of these individual rule-makings," Peirce said. "But when you've got them coming fast and furious, you've just got to make decisions about how you allocate your time as well."
