Dec 4, 2023 - Business

SEC's "Crypto Mom" doesn't offer unconditional love

Commissioner Hester Peirce at Permissionless II in Austin, Texas. Photo: Thomas Allison/Bloomberg via Getty Images

Commissioner Hester Peirce is held up as industry champion at the SEC for often going toe-to-toe against crypto enemy No. 1, chairman Gary Gensler.

Yes, but: Peirce, or "Crypto Mom" per her nickname, doesn't view herself as pro-crypto, per se. According to Peirce, her core philosophy of how government should work just happens to align with a key industry tenet.

What she's saying: "I come from the perspective of being — 'Let's not jump to regulation as our first solution,'" Peirce, a lawyer and free markets advocate, tells Axios in an interview at headquarters in D.C.

  • In that way, Peirce's nickname doesn't suit her, she says: "It's kind of funny. I don't care one way or the other, but I do think it's important people don't think of regulators as parental."

Zoom in: Peirce's positions do often break from Gensler's in crypto.

  • She published dissenting opinions on LBRY, a content-sharing blockchain charged by the SEC with conducting an unregistered securities offering.
  • She questioned the merit of enforcement action in the agency's first NFT case, and was early in questioning the SEC's broad rejection of spot bitcoin ETF applications.

Between the lines: Peirce once expressed her dissent via T-shirt on a proposal to expand the definition of "exchange," using the shirt to highlight her point that the rule was so ambiguous it seemed to sweep in everyone and everything.

  • "It's gonna be so easy for us to say as regulators, 'Wouldn't it be nice if we could pre-clear the code everyone writes and sign off on that?' But what does that do to a country?" Peirce says of that decision.

Of note: The LBRY decision was "a low moment for the commission," according to Peirce — "Somehow they got selected as being one of the projects we went after and it was heartbreaking to me to see that company shut down effectively."

  • She cited the Impact Theory decision this summer — the agency's first enforcement action against a non-fungible token (NFT) sale, as being another important moment.
  • "A lot of people looking at this are saying: 'Wait a minute, if you took the same theory and applied it in a myriad of other contexts we would have so many things that were securities that this agency would be completely unable to regulate the markets because we'd be regulating chinchillas, Pokémon cards, baseball cards and Beanie Babies.'"
  • "And that doesn't make sense," she says.
  • "When it comes to crypto, we're treating it differently than we've treated any of these other objects."

What we're watching: When asked whether her opinions have moved the needle of change at the SEC, Peirce's said, "I haven't seen it yet. I'm still hopeful."

  • How would she know if things are changing: "If we actually acknowledged the lack of regulatory clarity as an institution," she said, adding that another signal would be the agency working with folks in the industry.

What's next: Peirce still plans to leave at the end of her term in 2025 to pursue things like beekeeping. "That's the plan. I haven't made a lot of headway. I don't have bees yet."

Go deeper: SEC "Crypto Mom" Hester Peirce plans an exit after 2025

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