The SEC’s Hester Peirce says the regulator’s approach to crypto has been ‘strange’.

U.S. Securities and Exchange Commissioner Hester Peirce used her opportunity at the ATH Denver forum to continue her criticism of her own agency, complaining about “coercive leadership” and dragging its heels on the SEC's approval of Bitcoin ETFs.

“The Grayscale case basically gave us the option to approve a product that Bitcoin exchanges sell, and it's amazing to me that it took a court to say we have to do that,” Pierce said during a “fireside” chat with CNBC's McKenzie. Cigalos. I started in 2018. That summer, our first Bitcoin exchange – came before us as a commission. And I thought then – which was a long time ago now – we should have said yes.

What does the agency say to applications that are currently waiting to offer Ethereum Spot EFF?

“I'm sure people here are interested to know what's going to happen,” she said. “I'll take the lawyer's answer and say it will be considered by the SEC – there's not much I can say about that.”

One of the many complaints the cryptocurrency industry has leveled at the SEC is that the agency is using enforcement actions instead of regulation, prosecuting crypto companies like Ripple, Coinbase, and Lbry. Pearce, who regularly speaks at crypto events and finds a sympathetic audience for her critiques, said the SEC acted on the facts rather than establishing clear regulatory guidelines in advance.

“Some of the choices the SEC has made are very strange from the point of view of people who prefer regulation as a solution,” Pearce said. “Because when you push entities out of the US, you're pushing them out of control or out of reach of regulatory agencies in the US.”

Peirce again suggested that a common sense approach would be better.

“If you really want to separate the bad behavior from the good behavior, having clear rules for the people who want to follow them is a better approach than doing this, parachuting it in later,” she says.

Crypto enthusiasts and policymakers should work together to come up with ready-to-go ideas as SEC Chairman Gensler changes his stance on cryptocurrency, Pearce said.

The idea of ​​a “safe harbor,” she explained, is to put some basic information out there, and allow time for projects to get to that decentralized space. “Ideas that people accept to repeat and some people have already done.”

In the year In October 2021, U.S. Representative Patrick McHenry introduced the Transparency for Digital Tokens Act of 2021, a so-called safe harbor that aligns with Pearce's proposal and allows crypto startups up to three years to demonstrate and become “network mature.” Decentralized to the point that their associated tokens do not meet the definition of securities under federal law.

Bitcoin has gained some legitimacy in the eyes of the SEC because it is “decentralized enough.”

While Peirce advocated for fairer cryptocurrency regulations at the SEC, she also reiterated the agency's important role in decrying fraud in the crypto space.

“If you're talking about fraudsters who are defrauding people, I think we need someone to go after people like that,” she said. But still, I think we better sit down and think about what that means in this area. And that should be a conversation. It shouldn't be a one-sided ‘read our latest enforcement press release' conversation.

Peirce advised investors to run to regulators when they make a bad trade or decision.

“People who drive me crazy are like, ‘Government, get out of a job,' and then when something bad happens, ‘Government, why didn't you stop me?' Why didn't you tell me not to invest in this?” Peirce said. “With freedom comes responsibility.”

Edited by Ryan Ozawa.