Commissioner Hester Peirce wants to open the Security Exchange Commission (SEC) for innovation and entrepreneurship. It calls for a new and better regulatory framework that adapts to crypto space.
Commissioner Peirce: SEC to open the door to innovation
At an event titled "Protecting the Public in Promoting Innovation and Entrepreneurship: Getting Principles for Optimal Regulation" at the Missouri School of Law on February 8, 2019, SEC Commissioner Hester Peirce said the SEC's innovations welcome the improvement of the financial market function and facilitating access to financial markets for all sections of the population.
Peirce emphasized the importance of SEC's attitude to innovation and said:
[W]We govern an industry that is a key pillar of progress and productivity in the rest of the economy.
The introduction of blockchain technology is a great opportunity for the SEC to reconsider its approach to innovation and entrepreneurship. She explained
The Agency's ability to rethink its innovation approach also stems from a decade of technology development in the context of blockchain and cryptocurrency. This area has challenged many regulators around the world, and the SEC is certainly no exception. We ask, as do other regulators, how the existing rules in this area apply and whether a new regulatory framework would work better.
Peirce: Decentralization is the root of our economic system
Peirce acknowledges that decentralization is particularly challenging for the SEC because "block-chain based networks provide a new way of coordinating human actions that does not fit into our securities framework."
Decentralization is nothing new; it is the root of our economic system; Free markets use the talents and knowledge of people throughout society to produce what society needs.
One of the most critical issues is the fact that the SEC applies securities laws to crypto-asset offerings. However, when crypto assets are not traded as investment contracts, they are not securities. According to Peirce, "tokens sold for use on a functioning network rather than investment contracts are not covered by the definition of securities."
In this respect, Peirce worries about the "too broad" application of the Howey testThe Supreme Court has ruled whether a particular transaction should be treated as an investment contract.
Loud Howey testTo determine if a blockchain token is indeed a security feature, the token must meet three specific conditions:
1. An investment.
2. In a joint venture.
3. With profit maintenance mainly from the efforts of others.
However, as Peirce points out, not all blockchain-based projects could do so Howey test, She suggests that Congress could solve this problem "simply by requiring that at least some digital assets be treated as a separate asset class."
I look forward to working with you @SECJackson However, in order to open the door to innovation, we are not a merit regulator issuing quality seals. So we encourage investors to do their own work to decide whether an investment is right for them: https://t.co/iMA7NUkLRp
– Hester Peirce (@HesterPeirce) February 7, 2019
Last week, Bitcoinist reports that Peirce Commissioner Robert J. Jackson Jr. expects that the Bitcoin ETF will sooner or later be approved by the regulator.
With Commissioner Peirce's call to open the doors to innovation, is the SEC now more likely to approve Bitcoin ETFs? Tell us your opinion in the comments below!
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The Post-SEC Commissioner: Decentralization is the root of our economic system, first published on Bitcoinist.com.
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