Peirce knocks SEC climate rule, approach to crypto

SEC Commissioner Hester M. Peirce criticized the agency’s new climate disclosure rule and its approach to regulating cryptocurrencies at the Florida Securities Dealers & Advisors' Industry Outreach Program April 18.

“We didn't really need this new set of disclosures,” Peirce, one of two Republicans on the commission, said of the rule mandating public companies to disclose an array of climate-related information in their registration statements and periodic reports.

Before the rule came out, “companies that had climate-related risks were already making disclosures,” Peirce said, and the SEC’s disclosure review staff “would push back when they thought someone should be making disclosures that wasn't.”

Peirce said that putting the rule into practice could present issues, leading companies to make “guesstimates” on the new information required by the SEC.

“I think there are just some really difficult questions of how you figure out what you have to disclose and I think those difficulties will lead to guesstimates; I think they'll lead to practices that differ very widely across different companies,” Peirce said. “And the irony of that is that everyone told me the reason we have to do this, Hester, is because we need comparable disclosure across companies.”

SEC Chair Gary Gensler repeatedly has said the rule is needed to create consistent, comparable disclosures of climate-related information.

The rule already faces nine lawsuits filed against it, which will be heard on a consolidated basis in the 8th U.S. Circuit Court of Appeals in St. Louis. On April 4, the SEC decided to voluntarily halt implementation of the rule pending judicial review.

Separately, Peirce blasted how the SEC has handled its oversight of cryptocurrencies.

“This is one of the things I'm most disappointed in, of my agency's approach to things, is how we've handled crypto,” Peirce said, adding that the SEC is “taking the approach that we don't need a regulatory framework, (and) we can just do everything by enforcement.”

The SEC has filed enforcement actions against several cryptocurrency firms, contending that such firms are selling unregistered securities, though Peirce, some congressional Republicans, and many within the digital asset industry have pushed back on that.

Peirce said the SEC’s current approach to digital assets has “created distortions in the industry” and driven innovation away from the United States.

She noted that Congress may soon take steps to regulate the industry, but said, “I think even before Congress comes in, we could be taking a more productive approach.”

In July, the House Financial Services Committee and House Agriculture committee both advanced a bill aimed at regulating digital assets, which would split jurisdiction between the SEC and the Commodity Futures Trading Commission, though that bill has not made further progress.

There are also talks in Congress of passing a bill aimed at regulating stablecoins, or cryptocurrencies typically pegged to another currency or commodity, such as the U.S. dollar. The House Financial Services Committee advanced a bill along those lines in July, and Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., also introduced their own stablecoin bill on April 17.