Crypto-Friendly Hester Peirce Swears in for Her Second Term as a SEC Commissioner

Key Highlights:

• Hester Peirce and Caroline Crenshaw have sworn in for their terms as the Securities and Exchange Commission’s (SEC) commissioners
• Peirce, who has always been open to opinions from people outside the regulatory sector, aims to continue that practice
• There is still no clear pathway that project should follow in order to avoid trouble with the SEC
• Peirce has again expressed his disagreement with the SEC’s actions against Telegram
• The next few years of the commission’s work will likely be shaped by challenges of pandemic-related economic recovery and the increased rate of financial services digitalization

At the start of June, covered the news that the crypto-friendly US Securities and Exchange (SEC) commissioner Hester Peirce, also known as the ‘crypto mom’, was nominated to serve her second term at the commission.

The U.S. Senate has approved her nomination along with the nomination of a new commissioner Caroline Crenshaw on August 6. Peirce has finally sworn in for her second term on Monday, August 17.

Peirce sworn in alongside Caroline Crenshaw

Actually, both Caroline Crenshaw and Hester Peirce have sworn in on August 17. Commissioner Peirce's term will expire on June 5, 2025, while Crenshaw's term will end a year sooner. After being sworn in, Commissioner Peirce stated:

"I am honoured to be able to continue to serve our investors and protect the integrity and efficacy of our markets together with the SEC staff and my fellow commissioners, including my newest colleague, Commissioner Crenshaw."

SEC chairman Jay Clayton applauded Peirce’s past work, saying:

"As a Commissioner, Hester has been a tremendous advocate for our markets and investors, and I know she will continue to be a strong voice for them in the years to come.”

A commissioner that is open to suggestions from outside the regulatory community

Even in her previous term, Peirce has always tried to gather as much information from as many possible sources before making a final judgement. She has again highlighted the importance of not living in a regulatory bubble, saying: 

“I really believe that as regulators, we need to be drawing on the wisdom of people outside of the regulatory community. And that's, again, part of what I really like about this area, which is that people are coming and looking at our securities laws from a totally fresh and new perspective. And they make me think about things in ways that maybe I wouldn't have thought about just based on talking only to securities lawyers.”

She also noted that in her previous term she has established some relationships that had helped her solve the issues that she faces as an SEC commissioner. She hopes that these relationships will further deepen in the following five years. 

What happened with Peirce’s safe harbor proposal?

Concerns about token sales, including ICOs, are definitely going to remain a hot topic in the discussions between the crypto community and the SEC in Peirce's following term. She is well-known for her proposal of a safe harbor deal – a three-year grace period for new cryptocurrency projects.

Despite her efforts to clarify the regulatory framework around token sales, there are still no guidelines that projects should follow in order not to get in trouble with the SEC for the sale of unregistered securities. Furthermore, even if project registers its tokens as securities, it will soon stumble upon another issue – the fact that there is no marketplace for trading such securities in the U.S. In a recent interview with Cointelegraph, commissioner Peirce stated:

“I think we've made it really hard for people to do legally compliant token offerings in the U.S. […] I don't think it's a good thing that people don't have a compliant way to get from the point where they've funded and built a network to the point where they've gotten the tokens into the hands of people who want to use them. [...] It's really important for people to have a way to get to the point where the tokens are out there circulating.”

The case of the SEC vs. Telegram

In the recent interview, Peirce also touched the topic of the case of Telegram vs. the SEC. Her statement again resonated with regret behind halting the distribution of GRAMs on April 1, 2020, which eventually resulted in the developers abandoning the Telegram Open Network Project. She has criticized the SEC’s action against the messaging project already in July, saying that the commission may have overstepped its boundaries in that case and questioning who this action has protected. This time, she contemplated the commission’s questionable priorities:

“What was the end goal of what we're trying to do? You know, it's one thing to say you're enforcing the securities laws, but when the end result is that the people — people who wanted to take advantage of this, who knew of the work that had been done in building that network — are not able to do so because we came in and we said, ‘sorry, the way that you're distributing the tokens doesn't work under our securities laws,’ I don't understand who that was helping.”

COVID-19 recovery and the digitization trends

Another major topic that is likely going to shape the work of SEC commissioners for the next few years is the economic recovery from the COVID-19 pandemic. Peirce stated that the SEC can and will help troubled companies raise funds they need to "get back on their feet". 

Furthermore, the lockdowns and restriction of in-person meetings and errands have pushed forward the process digitalization of various aspects of our lives, including the financial services. Consequently, the SEC itself will likely have to put additional efforts towards migrating their services online as well as pass new frameworks to regulate the online financial services offered by other companies. Peirce noted that the pandemic is a better-than-ever time to move financial services online:

“What we can say now is, yes, there is a part of the population that is very paper-dependent still. But we've seen during COVID that people have transitioned lots of aspects of their lives to the virtual framework, to digital, and so I think people are more comfortable and I think they'll be less resistant to making that much more common.”

We are also looking forward to Hester Peirce serving another 5 years at the SEC. We wish her good luck and hope that she will continue to provide a voice for the cryptocurrency community.