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SEC's Peirce hopes for more DeFi enthusiasm from Biden administration

Lucinda Shen
Mar 16, 2022
Illustration of the Marriner S. Eccles Federal Reserve Board Building against a backdrop of pixelated coins.

Illustration: Shoshana Gordon/Axios

The price of cryptocurrencies soared after President Joe Biden's administration released an executive order last week calling on government agencies to examine digital assets.

SEC commissioner Hester Peirce, affectionately dubbed "Crypto Mom" by the web3 crowd, has a more measured view: "I was surprised at what I think has been quite an overwhelmingly favorable response from the crypto community," she tells Axios Pro Fintech.

What's happening: On the positive side, Peirce says the order shows a genuine interest in examining different aspects of crypto, and signals that administration is taking a more deliberative approach to regulating the industry.

  • "The top takeaway is, yes, they recognize that crypto is here to stay," she says.

Yes, but: The order focused on areas like a central bank digital currency, and did not specifically dive into parts of the ecosystem Peirce believes could lead to more innovation in the U.S.

  • "I would've liked to see more enthusiasm about the potential for innovation to transform the financial system and to transform the way things are done in society," she says, pointing to areas like decentralized finance. "There wasn't as much emphasis on the value of the personal liberty aspects of it."

Meanwhile, DeFi — even within crypto — sits in a grey area at the moment. The SEC is undoubtedly looking to regulate the sector. The question, however, is how do you oversee an entity that, in theory, has no central authority?

  • Peirce believes it should be a case-by-case question. Some so-called decentralized protocols are, in fact, more centralized than they seem.
  • But in the case of truly decentralized companies, says Peirce, a new legal framework needs to come into play—raising a whole new set of questions. For example, should there be one designated person who is held responsible when regulators call?

Her stance — that decision-making power should lie more in the hands of the individual than in the government — even trickles down to her opinion of the "Crypto Mom" moniker.

  • Although she finds the term of endearment funny, she cautions against seeing government — including herself — in a parental light.
  • "I know I'm being overly serious, but I think it's really important in the United States for people to recognize the government as a servant of the people," she says.
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