Several hours after the Securities and Exchange Commission announced it is reopening the comment period for the proposed amendments to the exchange act on Friday, April 14th, Commissioner Hester Peirce published her retort. In the press release, Peirce voiced her dissent with the decision and stated that the broad net the agency is trying to cast is “rendering innovation kaput”.
Hester Peirce Says SEC is “Rendering Innovation Kaput”
Commissioner Hester Peirce published her retort to the recent SEC decision to restart the comment period for its proposed amendments to the Exchange Act for the second time since they were unveiled. In the release, the Commissioner broadly argues that the current iteration of the agency is all to keep on overstepping its authority thus stamping down on useful innovation.
While Peirce has numerous issues with the SEC’s actions and proposals, they can be broadly summarized in several key points. The amendments fail to offer a truly clear framework and is trying to implement “unworkable” standards, said lack of clarity and what she considers intentional ambiguity undermines the First Amendment protections, and the SEC is again failing to consider if compliance with the amendments is even possible.
The amendments themselves were initially proposed in January 2022 and returned to the comments period of 30 days in the May of the same year for the first time. They have, however, proven to be highly controversial as they would have a broad and—many believe—highly detrimental effect on the digital assets industry as they would force nearly all DeFi platforms to register and likely force centralization. Chair Gary Gensler, however, stated that DeFi platforms already fall under the jurisdiction of the Exchange Act and the amendments would simply offer greater clarity.
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The Opposition to Gensler’s Approach From Within and Without
Considering the fact that the SEC under Chair Gary Gensler has been rather tough on the cryptocurrency industry, many digital assets advocates have been increasingly hostile toward his approach. Undeterred, Gensler on multiple occasions reiterated his commitment to bringing the sector under the fold of his agency most recently saying the industry is—by and large—not compliant.
Gensler has several vocal critics among American lawmakers. He has been repeatedly called out by Representative Tom Emmer who famously likened the SEC to a “shakedown authority” when it comes to cryptocurrencies. Additionally, Patrick McHenry, the chairman of the House Financial Services Committee, along with Representative Bill Huizenga, recently sent a letter to the SEC accusing the agency of failing to provide adequate detail on their case against FTX’s Sam Banknam-Fried.
After receiving a Wells notice from the SEC, the cryptocurrency exchange Coinbase started vocally voicing the same concern as Commissioner Peirce in her statement—that the regulators are doing little to protect investors and a lot to drive innovation out of the US. Today’s retort also isn’t the first time Peirce expressed her opposition. Shortly after the $30 million settlement with Kraken was announced, she published her “Kraken Down” statement accusing the SEC of being “lazy and paternalistic”.
Do you think the SEC is overstepping its mandate when it comes to digital assets? Let us know in the comments below.
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