SEC Commissioner Hester Peirce said she wants the agency to work on providing regulatory clarity to critical issues relating to crypto as part of the agency's spring regulatory agenda.
Peirce, sometimes called “Crypto Mom” for her push for crypto regulation, said the agenda, released on Wednesday, is full of “hot-button” topics implemented in an unreasonable hurry, while crypto is virtually ignored.
Although the agenda includes rulemakings “that might regulate crypto protocols or platforms through an unmarked backdoor, it does not appear to include any rules primarily intended to grapple with the main regulatory questions” facing the industry, she said.
She named four crypto areas where regulatory clarity “would be appreciated,” including defining what constitutes a digital security and custodial issues, including the agency’s controversial Staff Accounting Bulletin 121, which the Securities Industry Financial Markets Association (SIFMA) has said impacts the treatment of crypto assets held in custody by regulated entities and “raises significant process, policy, and related concerns."
Peirce said that instead of directly dealing with crypto, the SEC’s agenda “continues to shun issues at the core of our mission in favor of shiny objects outside our jurisdiction. We used to focus on companies’ disclosure of economically material information; we now focus on disclosure of hot-button matters outside our remit."
“We once sought to protect retail investors; we now rush to the aid of professional investors. We once worked to help small and emerging companies raise the funds that are their lifeblood; we now work to increase their costs and shrink their investor base. We once hoped to increase the ranks of public companies by making it less costly and more beneficial to be public; we now look for ways to force companies to go public since we are making it costlier to go public and be public,” the commissioner wrote.
The SEC’s agenda does pursue “some important mission-focused rules, such as updates to the investment adviser custody rules, data security rules for the Consolidated Audit Trail, updates to the electronic recordkeeping rules for broker-dealers, and rules to shift from paper to electronic filings,” she acknowledged.
Yet “it drops or postpones indefinitely too many others, including transfer agent rules, a joint project with the Commodity Futures Trading Commission to develop uncleared swap portfolio margining rules, rules on investment company securities lending arrangements, and rules to reform proxy plumbing infrastructure and the fund proxy system,” Peirce continued.
She also accused the agency of using “precious regulatory bandwidth” to reopen rules that are less than two years old, including proxy voting, shareholder proposals and whistle-blower rules, "even though we have no new information that could justify revisions so soon.”
The agenda also reflects a “rush of radical rulemakings” with short comment periods and market participants forced to implement multiple rules simultaneously, Peirce said.
If enacted, the agenda “risks setting off the regulatory version of a rip current—fast-moving currents flowing away from shore that can be fatal to swimmers. ... The pace and character of the rulemakings on this agenda make for dangerous conditions in our capital markets.”
Peirce, a Republican appointee, is often the lone dissenting voice and vote on the SEC commission, particularly when it comes to crypto. She has criticized the commission for “leading with enforcement” and failing to provide regulatory guidance when implementing and enforcing rules.