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Hester Peirce Critiques SEC Crypto Regulation Approach

SEC Commissioner Peirce critiques SAB 121, sparking debate on crypto regulation and public engagement within the agency.
Hester Peirce Critiques SEC Crypto Regulation Approach

Highlights

  • Peirce criticizes SEC's crypto guide, SAB 121, as a regulatory maze.
  • House Committee moves to rescind SEC's controversial SAB 121.
  • SEC's Peirce highlights decline in public engagement on crypto rules

During the “SEC Speaks” event, an initiative sponsored by the Practicing Law Institute, SEC Commissioner Hester Peirce voiced her criticisms concerning the regulatory approach of her agency towards the crypto industry, particularly focusing on Staff Accounting Bulletin 121 (SAB 121).

Peirce, known for her independent views within the Commission, highlighted the complexities introduced by crypto regulation such as SAB 121 and related oral guidance, which she argues complicates the regulatory landscape for firms involved in the custody of digital assets.

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Controversy Surrounding SAB 121

SAB 121 was released in March 2022 and requires companies that hold cryptocurrencies on behalf of customers to record these assets as liabilities on their balance sheets.

This instruction has stirred controversy between the crypto community and legislators as to whether such a directive would discourage banks from offering custodial services for digital assets.

The wide-ranging implications of the bulletin have led to legislative attempts at its rescission, with the argument that such an important regulatory measures must be passed by the Commission itself, not through the staff-level guidance.

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SEC’s Public Engagement Criticized

Commissioner Peirce argued that the SEC’s link to the public has become loose and pointed out that the meaningful interaction between the Commission and the stakeholders has been reduced. 

Peirce points out that some public inquiries and concerns on crypto regulation are ignored due to a change in agency behavior to one that does not encourage proactive communication and transparency.

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Legislative Response to Crypto Regulation Concerns

In response to the controversy surrounding SAB 121, the House Financial Services Committee has taken steps to challenge the bulletin’s standing. The committee recently voted to advance a resolution that, if passed by both the House and Senate, would nullify SAB 121. 

Those in favor of the motion claim that the bulletin’s demands go against conventional banking practices and may have unintended side effects on the rapidly growing crypto market, among which could be the effects on the spot Bitcoin exchange-traded funds (ETFs) that were recently approved.

Read Also: Pennsylvania “Green Amendment” Gets Dragged in Crypto Mining Pollution Case

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Kelvin Munene Murithi

Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.

Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
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