- 1 At Australian Blockchain Week 2023, the SEC Commissioner provided some suggestions to U.S. crypto lawmakers.
- 2 The upcoming regulations should be flexible to accommodate non-financial aspects of the digital asset industry.
Hester Pierce, known for being a supporter of crypto, argued that everything in digital assets is not a financial asset, which is something that lawmakers must understand. The United States Securities and Exchange Commission (SEC) commissioner was speaking remotely at the Australian Blockchain Week.
Crypto News: SEC Commissioner Hester Pierce Calls for Balanced Crypto Regulations— Radclyffe 💨 (@OxLandon_PROM) June 29, 2023
Everything in Crypto is Not a Financial Asset – Herser Pierce
The SEC Commissioner spoke remotely at the Australian Blockchain Event on June 29, 2023. When asked how she would regulate digital assets if given the opportunity, she answered as follows:
“I think we have to make sure that whatever regulatory framework you have doesn’t just assume that everything is a financial asset.”
Every primary jurisdiction tries to develop a comprehensive regulatory framework to regulate digital assets. A common problem they face is classification; some want to categorize them as securities, while others consider them commodities. The U.S. faces a similar issue. The SEC has called for select digital assets to be treated as securities, while the Commodities Futures Trading Commission (CFTC) argues that Bitcoin and Ethereum are commodities.
There are multiple aspects of the digital asset ecosystem and blockchain technology. Pierce argued about non-financial angles of the crypto industry, for instance, the possibility of facilitating public interaction without a centralized entity. Furthermore, the metaverse allows for a lot of such possibilities, with limited concerns towards its financial aspect.
Protecting investors is important, but the government needs to have a good reason to prevent people from investing their own money as they choose: https://t.co/QgPm38iSrp— Hester Peirce (@HesterPeirce) June 27, 2023
The SEC Commissioner stated that any legal framework surrounding digital assets should follow “a reserved approach.” They should also be flexible enough to clarify the multiple aspects of these digital assets so that people are aware of the different ways in which they can be used.
Placing a rigid framework around a flexible technology would inadvertently limit the immense possibilities of blockchain technology and digital assets. The regulatory crackdown on the digital asset industry carried out by the SEC hints at a rigid structure, where every other cryptocurrency and token would be treated and dealt with as securities.
With its current approach towards regulating the space, the SEC faces criticism, and a motion to remove chair Gary Gensler is underway. A bill was introduced in the lower chamber of the United States called the SEC stabilization act. It is aimed towards making significant reforms in the agency, including replacing Gensler.
Pierce also faced criticism but argued that the laws “can’t be reversed then, all of a sudden, [regulators] come in five years later with a bunch of enforcement actions.”
When asked about her advocacy towards digital assets, she said that the financial watchdog could do a better job. The industry places new challenges and opportunities before the SEC and regulators, forcing them to redirect their approach to create a flexible and comprehensive regulatory framework.
Upcoming U.S. Regulatory Scenario
The U.S. is about to witness the emergence of two digital assets laws, which would place the CFTC in a powerful place and ahead of the SEC to regulate the space of digital assets.Rep. Patrick McHenry has confirmed that the bills are set to undergo parliamentary procedure and will be put to a vote in early July 2023. He is the chair of the House of Financial Services Committee.
#NEW: Chairman @PatrickMcHenry & @RepFrenchHill release a digital asset market structure proposal with @HouseAgGOP Chairman @CongressmanGT & @RepDustyJohnson in an unprecedented joint effort to provide clarity to the digital asset ecosystem.— Financial Services GOP (@FinancialCmte) June 2, 2023
Read more:https://t.co/089dV2SYng pic.twitter.com/pSIIVjfslU
McHenry said that the upcoming legislation would provide the required clarity surrounding the digital asset ecosystem. As per the draft, the exchanges and the digital asset service providers would have a clear regulatory path to follow.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.