Commissioner Hester Peirce of the U.S. Securities and Exchange Commission (SEC) is sounding off against Chair Gary Gensler’s anti-crypto agenda.
In a new speech, Peirce slams the regulatory agency for proposing an adjustment to the definition of “exchange” so that it would include decentralized finance (DeFi) protocols.
According to Peirce, such a change would be counterproductive and only serves as a way to force centralization and stagnation.
“Stagnation, centralization, expatriation, and extinction are the watchwords of this release. Rather than embracing the promise of new technology as we have done in the past, here we propose to embrace stagnation, force centralization, urge expatriation, and welcome extinction of new technology. Accordingly, I dissent.”
Peirce says the SEC’s proposal could violate First Amendment protections by categorizing blockchain ecosystems as part of a “group,” creating ambiguity about their speech rights.
“The release’s ambiguity undermines fundamental First Amendment protections. Because the release makes everybody involved in the relevant blockchain ecosystem part of a ‘group,’ it creates significant ambiguity around what speech requires government pre-approval, which will unavoidably chill constitutionally-protected speech.”
The Commissioner goes on to say that the SEC should remain open to the idea that it will need to tweak its rules to accommodate new technologies, something she says it understood in the 1990s.
According to Peirce, the SEC’s latest release signifies an era where cutting-edge businesses may be locked out as they can’t conform to the existing regulatory mandates.
“A Commission serious about regulating – and not destroying – this market would reflect on this near unblemished record of regulatory failure and do something about it. We would consider the possibility that our rules, which in the past have evolved to address the needs of, and the risks presented by, investors and firms in the traditional securities markets, might require some tweaking to permit firms to offer innovative ways of doing finance using novel technologies.
The Commission of the 1990s understood this basic principle and created space for significant innovations in securities trading. This release, on the other hand, takes the view that any business model that cannot meet the specific requirements of our existing regulatory model does not belong in our markets.”
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