Delay in Crypto Regulations May Create More Space for Technology
February 11, 2019 3:31 pm
Last week a commissioner of the United States Securities and Exchange Commission (SEC) revealed that the delay in establishing crypto regulations might allow more freedom for the industry to move on its own.
Heister Peirce, who is known as the “Crypto Mom” in the community for her disapproval for SEC’s decision to reject a Bitcoin exchange-traded fund (ETF) proposed by the Winklevoss twins, expressed her views in a speech on the issues of state regulation at the University of Missouri School of Law.
While discussing the current delays in delivering a transparent legal framework for crypto, Pierce said that ambiguity is not bad. She explained:
“We might be able to draw clearer lines once we see more blockchain projects mature. Delay in drawing clear lines may actually allow more freedom for the technology to come into its own.”
The commissioner observed that the process of regulating a new industry might be lengthy, and emphasized the point that the SEC has to act appropriately for enabling the industry to grow without compromising the existing laws:
“If we act appropriately, we can enable innovation on this new frontier to proceed without compromising the objectives of our securities – protecting investors, facilitating capital formation, and ensuring fair, orderly and efficient markets.”
Nevertheless, overregulation occasionally does take place, Pierce lamented. She asserted that enforcement actions are not her preferred way to set expectations for crypto investors. Furthermore, she added that some crypto projects are just unable to thrive within the current framework, because “securities laws make them unworkable.”
The commissioner also believes that the SEC is often too hesitant in dealing with crypto projects and that investors willing to raise capital might be dissuaded from excessive caution:
“We rightfully fault investors for jumping blindly at anything labeled crypto, but at times we seem to be equally impulsive in running away from anything labeled crypto. We owe it to investors to be careful, but we also owe it to them not to define their investment universe with our preference.”
Lastly, she concludes that the U.S. Congress might resolve the ambiguities linked to crypto with the simple pre-condition that at least some digital assets should be considered as a separate asset class.