SEC Commissioner Hester M. Peirce is optimistic the agency will provide clarity for stakeholders interested in cryptocurrency assets with Gary Gensler at the helm.
President Joe Biden on Jan. 18 announced Mr. Gensler, former chairman of the Commodity Futures Trading Commission, as his pick to lead the Securities and Exchange Commission. Mr. Gensler, a professor at the MIT Sloan School of Management, has taught classes and testified before Congress on digital currencies and blockchain technology.
The SEC needs to do more work to provide clarity for broker-dealers, investment advisers and others looking to enter or enhance their footprint in the cryptocurrency arena, said Ms. Peirce, who is often called "crypto mom" for her longtime advocacy of these assets, during a webinar Tuesday on digital assets that was hosted by the U.S. Chamber of Commerce.
"I think that if Gensler is confirmed ... he brings a really nice background of understanding this space, having immersed himself in this space over the last several years," Ms. Peirce said. "But he also has a real understanding of how regulation works and so I think the combination could lead to an embrace of regulatory clarity."
In a February 2020 speech, Ms. Peirce outlined a proposal to establish a three-year safe harbor for cryptocurrency firms interested in offering tokens so they "could facilitate participation in and the development of a functional or decentralized network, exempted from the registration provisions of the federal securities laws," as long as certain conditions are met.
"Whether it is issuing tokens to be used in a network, launching an exchange-traded product based on bitcoin, providing custody for cryptocurrency assets, operating a broker-dealer that handles cryptocurrency transactions, or setting up an alternative trading system where people can trade cryptocurrency assets, our securities laws stand in the way of innovation," she said in her February speech.
Ms. Peirce said Tuesday that adopting a safe harbor would offer regulatory clarity and hopes Mr. Gensler will embrace her idea or something similar.
"He understands the importance of allowing financial institutions to step into this space and providing them the regulatory groundwork that they need to do that," Ms. Peirce said. "So I'm optimistic that we'll be able to have some great conversations about this. Of course, as always, cryptocurrency will have to compete with the many other items on the agenda, but I think it's one that, if he's confirmed, Chairman Gensler will pay attention to."
Mr. Gensler's Senate confirmation process has yet to begin and no date has been announced for his hearing before the Senate Banking Committee.