SEC Commissioner Hester Pierce Says She’s Against Crypto BailoutsJune 22, 2022 1:44 pm
SEC commissioner Hester Pierce just voiced out her opinion about being against crypto bailouts as the industry is currently in a bearish position which has led to many crypto projects shutting down.
The view is that the ongoing bear market will inevitably make the industry stronger as it weeds out the projects that do no have value while increasing the growth of those that do have value.
The comment was following the Celsius Network deciding to freeze withdrawals and the UST stable coin collapsing which had a negative reaction from the market.
While it seems likely that there may not be any government funded bailouts for the crypto market, this does present an opportunity to truly evaluate what regulation may look like going forward for the projects that survive.
But watch them bailout the central banks when they go down again 🤦🤡🍿https://t.co/V7anBC4JWy
— Coach Tyberious (@CoachTyberious) June 22, 2022
Though some companies may seek bailouts, Peirce suggested that bailouts are outside the Securities and Exchange Commission’s authority. Furthermore, she said that she does not support bailouts for cryptocurrency companies.
She added that crypto “does not have a bailout mechanism” and that this absence is “one of the strengths of that marketplace,” implying the crypto market has some ability to self-regulate. She concluded: “We really need to let these things play out.”
Peirce went on to advise investors to be wary of any service that promises high returns. In that case, investors “need to be asking questions about its associated risks,” she said.
Beyond the topic of bailouts, Peirce noted that the SEC may receive more tips on fraud under the current conditions. She warned that scammers may take advantage of investor desperation resulting from the bear market.
Pierce has been known by the crypto community to be an SEC official that has been friendlier towards crypto than other SEC counterparts such as Gary Gensler.
The Responsible Financial Innovation Act, which was proposed by Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) earlier this month is also gaining some traction.
This proposed act was created in response to widespread frustration regarding unclear regulation guidelines for crypto which many have stated will stifle growth and innovation.
Pierce has expressed support for the act, but whether or not the act will be able to get passed is still unknown at this point in time.
The lack of possible bailouts here is quite a stark contrast to the bailouts that have been done for traditional equities markets in the past.
With that being said, some crypto whales have stepped in to do the bailing out which contradicts Pierce’s opinion as as FTX’s founder.
Crypto mom Hester Peirce said that bear markets like this are the right way to punish over-leveraged players.
FTX Chairman Sam Bankman-Fried has extended $250 million capital help to BlockFi as a bailout during the testing times.
SEC Commissioner Heste… https://t.co/fAGlNrxQ9T
— Crypto-News (@criptikos) June 22, 2022
FTX and Alameda Research founder Sam Bankman-Fried is taking a different approach and has been stepping in to rescue crypto companies struggling due to the market crash.
On Tuesday, Bankman-Fried informed his 706,900 Twitter followers that he and FTX will be injecting $250 million into BlockFi through a revolving credit facility to bolster its balance sheets and strengthen the platform.
It came only days after Alameda Research agreed to give Voyager Digital a 200 million USD Coin (USDC) loan and a “revolving line of credit” of 15,000 Bitcoin (BTC), worth $446.3 million at the time of writing, to be used “if needed to safeguard customer assets.”
'I dont support #crypto bailout,
Need to let these things play out.'
-Hester's Peirce "Crypto bailout" track dropping in july 2022 https://t.co/bboKnRdTcu
— Be Ce (@DzikaBomba1916) June 22, 2022
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