SEC Commissioner Says Delay in Crypto Regulation Will Give More Space for Blockchain to Mature

Uncertain cryptocurrency regulations is providing as a major hurdle blocking institutional capital inflow in the crypto space. Everyone is eagerly waiting for the SEC to come up with clear guidelines and rules relating to the use of security laws for crypto token offerings.

Last week on Friday, February 8, SEC Commissioner Hester Pierce, also popular as “Crypto Mom”, gave a speech at the University of Missouri School of Law. Pierce noted that the agency employees are working on supplemental guidance” that can help projects determine if “their crypto-fundraising efforts fall under the securities laws.”

Currently, the SEC relies on Howey Test which is the U.S. standard for determining whether something is a security. Although the Howey Test provides some sort of clarity, Pierce said that there’s a need to tread carefully” as every token offering might not necessarily resemble traditional securities offering.

Citing a report from Coin Centre, Pierce explained that unlike traditional securities which is major controlled by issuer or promoters, the fundraising through decentralized token offerings could mean that it’s not truly controlled or owned by a person or company.

Furthermore, which speaking on the delay on the part of SEC to bring clear guidelines, Pierce said that ambiguity is not always that 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.”

She also noted that the process of regulating a completely new industry might be lengthy. Pierce stated that SEC has to absolutely appropriate and responsible while making decisions to enable the industry to evolve without compromising on the existing laws. She said: If we act appropriately, we can enable innovation on this new frontier to proceed without compromising the objectives of our securities laws — protecting investors, facilitating capital formation, and ensuring fair, orderly, and efficient markets.”

On the other hand she also stresses that over regulation of the industry is certainly not desirable. Note that Hester Pierce has often voiced her dissent with the agency’s previous stand on denying exchange-traded-funds (ETFs). Earlier, Pierce asked the agency not to police heavily around the newly emerging crypto industry and its related products. This is the reason to why Pierce is popular in the crypto community and called as the “crypto mom”.

In her recent speech, Pierce said that enforcement actions are not her preferred methods. She believes that the agency is sometimes very reluctant to deal with crypto projects, acting as a hurdle for investors willing to raise money.

She stated: 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 preferences.”