Compilation | Wu Talks about Blockchain
In an interview with Zack Guzman of Coinage, SEC Commissioner Hester Peirce shared her thoughts on cryptocurrency regulation, the Bitcoin ETF approval process, market futures, and future regulatory directions. She also discussed the impact of SAB-121 and Congressional efforts to define securities and commodities. Peirce emphasized the importance of industry self-regulation and the role of government, and expressed optimism about future changes in regulatory culture.
original:
https://www.coinage.media/s3/ethereum-etfs-potentially-able-to-stake-in-the-future-secs-peirce
Ethereum ETF approved without a committee vote, what is the actual situation behind it?
Peirce: It's not that unusual that there was no committee vote. A lot of these ETP approvals were done at the delegation level, meaning we delegated the authority to staff and staff could approve them without a formal committee vote. But I think that's not that unusual because we have bitcoin exchange-traded products. The courts told us we had to basically move forward, and that's what happened. And then applying that same logic, we really didn't have a lot of options for approval of these ETPs.
What is the difference between a Bitcoin ETF and an Ethereum ETF?
Peirce: I think the Bitcoin ETF is really unusual because after years of buildup and so many different people trying to get approval, they're all going to go live, and everybody knows they're going to go live at the same time, and there's so much anticipation around it. And while there was anticipation around the ETH ETF, what we're seeing is an iterative process where they get approved in terms of trading and markets, and then they still have to go through the corporate finance process, which is what's happening now. So I think the atmosphere around the ETH ETF is much calmer. I think that's the main difference. Really, we shouldn't be looking to create drama when these products are launched, it should be that they go live and then we see if people are willing to buy them, and that's how it should work.
Staking was removed from the application early on, why, and is there any possibility of change?
Peirce: Regarding the removal of staking from the application, I don't comment on what happened between the staff and the issuer. But I think that products with certain functions, such as staking or other functions, can always be reconsidered.
Does the Solana ETF application require a futures market for approval?
Peirce: I'm a little hesitant to comment on these applications because they're before us. I can't comment on them. What I can say is that we have to look at the facts and the circumstances. What people need to do is they need to look at the precedents of previous ETPs, not just crypto ETPs, but other kinds of ETPs, and make a case that they can be approved under existing laws and rules. So we have to look at it on a case-by-case basis.
I think people need to look at whether there are other types of markets or products that don't have futures markets as an underpinning and then they can make a case based on that.
Should SAB-121 be repealed, and what would be the impact on cryptocurrency custody?
Peirce: I think the process by which SAB 121 was issued was terrible. To me, it actually looks like a rulemaking that could have been done with public comment, maybe by FASB considering this rather than us. But regardless, we should have had a public comment period, and we didn't. The attempt to overturn it was unsuccessful. But before the attempt to overturn it, SAB 121 had been expanded in scope. Initially it was primarily for public companies, and then it started to apply to broker-dealers. It had a lot of verbal guidance about what broker-dealers could and couldn't do. Now we're hearing that there are other kinds of adjustments or changes, and it's all being done in a very opaque way. I don't understand how that's doing people any good. We should have followed the process. I'm very disappointed with SAB 121, and I think we can do better and should have done better.
One of the reasons I've always been against SAB 121 is that it takes the position that we don't want experienced participants custodial cryptocurrencies, which to me is a very strange and investor protection-detrimental position. So I welcome more people coming in and participating in the custody space as it develops. But it should be done in an orderly manner. I think it's a positive development to have participants with experience in other areas involved in crypto. Unfortunately, the government, whether it's at the SEC or elsewhere in the government, often tries to kick out participants who are interested in participating but are not welcome. So this is really a potentially positive development. I hope to see more participants entering the custody and crypto space.
FIT-21 determined that Congress can draw the boundaries of cryptocurrency. Are you proud or concerned about the regulatory direction you are seeing so far?
Peirce: I think it's great that Congress is taking the time to think about these very difficult questions (drawing the line between what cryptocurrencies are and aren't allowed in the U.S.) that we could have taken a more aggressive stance on in the regulatory space, and that Congress is trying to provide some guidance. I think it's a positive step for the U.S. to have a real conversation around these issues and try to find the right solutions.
But I think we're still in a bad place on the regulatory side because we're still driving policy through enforcement, and that's not the way policy should be driven. It should be about thinking about a regulatory framework and then starting from there, and then using enforcement to deal with fraud.
Another area that I've been pushing hard is the global stablecoin space around cross-border payments and tokenization on the blockchain. I think the U.S. probably won't be at the forefront of that path, and seeing how other countries are trying to build an environment for people to experiment with these things is a great example for us to learn from. I still think we can do that with some rules or a sandbox experimentation framework. Because the rest of the world will do it. I don't want us to fall behind. I think we have a strong ability in the U.S. to try these experiments, so I hope we can do that at some point.
Has the culture within the SEC changed? Are you optimistic about the future direction of regulation?
Peirce: Cultural change requires some positive steps, working with people and providing guidance. I am optimistic about future regulatory cultural change because I see people finding positive ways to interact with the industry. Ensuring the vitality of the industry is very important to us and it is one of my priorities.
If you became SEC Chairman, what would be your highest priority?
Peirce: Ensuring the vitality of the industry, allowing investors to make their own decisions, and ensuring that we don't create unnecessary obstacles in rulemaking.
