Hester Peirce, SEC Commissioner, and CryptoMom have yet again shared strong points in favor of crypto covering the asset class, SEC to embrace this innovation, current tech revolution in financial industry is very exciting and its future impact.
SEC commissioner talks crypto- the asset class & SEC’s role
SEC Commissioner Hester Peirce, who has been dubbed as CryptoMom for her dissent on Bitcoin ETF rejection by SEC has yet again made some positive and powerful statements about bitcoin and crypto market.
To start off, she acknowledges being titled CryptoMom:
“In response to my dissent, I was informally dubbed CryptoMom. I always have wanted to be a mother, so acquiring this new title was quite an honor. Admittedly, this is not the form of motherhood I envisioned, but one of the wonderful aspects of motherhood is that children are quite different than their mothers anticipated they would be.”
Getting on the crypto world, she explains how the shift from uncorrelated asset classes to correlated has created an appetite for a new asset class to diversify portfolios:
“Cryptocurrencies may be one such asset class. As with all other products, investors need to exercise care and judgment in choosing whether and how to invest in crypto.”
Moving onto the crypto products, Peirce covers Bitcoin futures, hedging crypto holdings that are being stopped by SEC to which she says:
“The SEC helicopters in with good intentions, but often without sufficient concern for the way its regulatory blades roil the markets, frustrate innovation, and potentially expose investors to greater risks.”
She further points out that in Winklevoss Bitcoin Trust rejection, the SEC, “focused on the alleged flaws with bitcoin markets, rather than on whether the exchange proposing to trade shares of the trust had taken steps to ensure the orderly trading of those shares.”
Technological revolution in the financial industry now is “very exciting”
Peirce provided with five points for the commission to not to have govt. regulation as a precondition to allowing the product of that market to be traded in the regulated markets.
“First, because most of us regulators are neither entrepreneurs nor technologists, we should respond to attempts to bring innovative solutions into the financial markets with an appropriate degree of humility. We should avoid the temptation to supplant the market’s product testing with our own.”
For the second point, she notes “the benefits of institutionalizing the bitcoin market”, this would lead to the choice of
“Either create space for innovations to occur in our regulated markets or prepare for investors to seek out such innovations in less-regulated, or unregulated, spaces, such as foreign-registered products that lack the transparency that trading under our rules would provide.”
An essential step is to encourage innovations
“…in our markets to provide innovators with greater clarity and certainty in their interactions with the Commission and its staff. Innovators are often reluctant to ask for regulatory permission for fear of getting an adverse response.”
She explains in further points investor protection through innovative technologies as “technological change in the financial markets space has the potential to be as revolutionary as it is in other aspects of our lives.”
Hester says regulators play a different role than technological inventors that
“decide how revolutionary financial technology becomes in our markets.” She also points out that “existing rules combined with a strict liability approach to enforcement can scare firms away from innovating.”
According to her, SEC needs to embrace this innovation by providing more flexibility such as allowing firms to self-certify that fintech experiment is conforming with regulatory obligations.
She concludes her remarks with crypto’s impact on future:
“The technological revolution the financial industry is experiencing now is very exciting. New asset classes like cryptocurrencies and new ways for financial companies to communicate with investors are likely to make our world look very different ten years from now than it did ten years ago.”
Crypto friendly Hester Peirce, has always been in favor of giving this nascent industry room to grow in order to “make the U.S. a comfortable home for the next generation of innovators.”