Congress Must Clarify Who Regulates Crypto in the US, Says SEC Commissioner

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Congress needs to determine which regulator has authority over cryptocurrency markets, U.S. Securities and Exchange Commission (SEC) commissioner Hester Peirce said on Wednesday, as her organization cracks down on crypto companies and market players are looking for greater regulatory clarity.

US lags behind in regulatory clarity

Speaking at FT’s Crypto and Digital Assets Summit, Peirce said “there are questions about who has the power” to set rules on crypto, which must be determined by Congress.

Notably, several people testified at a congressional hearing on digital assets on Wednesday that there is a desire to divide specific crypto-related responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC).

Peirce’s comments come amid the SEC’s crackdown on crypto companies. Over the past few months, the SEC has taken action against Coinbase (COIN), Kraken, and Bittrex, among others.

SEC Chairman Gary Gensler has repeatedly said that there is no lack of clarity about the rules for crypto platforms, just a lack of compliance.

Peirce’s initial position was that existing securities laws were flexible enough to handle the emerging crypto asset industry. However, this view has changed over time.

“What we’re trying to do now is apply rules that really suit much larger, much more established companies to solve a problem that could be solved much more simply,” Peirce said. “For example, if you’re selling a token that people need, we can do that without requiring you to file a full registration that you would file if you were a public company.”

Peirce then outlined the message behind a recent proposed SEC rule regarding decentralization for crypto companies: centralize, leave the United States, or cease to exist. The SEC commissioner, however, challenged the theory that clear regulations in the United States will lead companies to move overseas in an effort to avoid those regulations.

“If we built a good regulatory regime, people would come,” Peirce said. “I think you’ll see it with [Markets in Crypto-Assets] Mica [regulation in Europe], and I think if the United States built one, people would come. And that would help distinguish bad actors from good actors because there would be questions if people decided to settle in a jurisdiction with no rules. That’s why I think we’re shooting ourselves in the foot by not having a regulatory regime in the United States.”

The United States can benefit from the opportunity to observe and learn from the implementation of MiCA regulations in Europe. But Peirce isn’t “very optimistic about the regulatory system” rapidly changing on crypto anytime soon; however, she acknowledged that Congress is currently working on potential legislation in this area.

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