SEC Commissioner Hester Pierce Speaks Out Against SEC’s Crypto Unit Expansion• May 7, 2022 1:52 pm • Comments
As revealed in recent weeks, the SEC has been hiring for an additional 20 new positions for their crypto enforcement unit for the reasons of investigating crypto fraud.
In response to that news, most investors within the crypto community reacted negatively claiming that the SEC was over-stepping its boundaries when it comes to regulation within the industry.
This recruitment is expected to drive the number of staffers within this crypto division to around 50 people and has also sparked some disagreements even within the agency itself.
SEC Commissioner Hester Pierce comment on Twitter that she had objected to this initiative and that this made the SEC more like an enforcement agency rather than a regulatory agency.
This then leads to the big question of why the SEC is getting involved with enforcement in the crypto industry in the first place.
Read why Hester Pierce does not like SEC’s plan of adding Crypto enforcement staff. https://t.co/1VCxoCT3Ko #Bitcoin #BTC #coindesk #NFT #Blockchain #web3 #investors #cryptocurrencies #Crypto
— Web3_LawCenter (@Web3_LawCenter) May 5, 2022
However, in a tweet, SEC Commissioner Hester Peirce raised objections to the move. She questioned the agency’s motives for targeting the crypto industry. This split in sentiment suggests internal strife within the agency.
The SEC has come under fire in recent times over its handling of crypto litigation. The most high-profile example of this is the SEC vs. Ripple case.
But others have come forward to air their grievances, including Lbry CEO Jeremy Kauffman, who likened his interactions with the agency to organized crime.
The discovery phase of the SEC vs. Ripple hearing has exposed the SEC to several allegations, including favoritism in picking winners and losers. But perhaps most damning is the claim that former director William Hinman had a conflict of interest while initiating legal proceedings against Ripple.
The recruitment for this crypto assets unit has clearly been supported by SEC Chair Gary Gensler as he said the purpose here was to bring faith to the US capital markets.
The reasons given here was that the growth of crypto would leave a lot of retail investors exposed to risk and fraud which is why the SEC is trying to “protect” them.
However, many have opposed to this view and believe that the real reason may not be for protection and that it is not for the SEC to decide even if protection was needed,
John Deaton also shared his views on the situation and commented that the SEC needed to hire more ethics officers instead of hiring crypto investigators.
Deaton stated that this would be needed in order to keep the SEC compliant with basic ethics rules and so that it only goes after those who actually violate criminal laws.
Hester Pierce makes sense. The SEC should be a regulator before an enforcer. How can you possibly enforce a law without creating the law. This is a joke. Disappointing from people who should know better.
— NEXUS 3.0 (@NEXUS_3_0) May 4, 2022
Dubbed “Crypto Mom” by many in the industry for being crypto savvy, Peirce has been a longtime opponent Gensler’s enforcement-heavy approach to regulation.
Gensler has been reluctant to share specifics on how crypto companies can comply with regulations, instead choosing to regulate through enforcement actions.
Rep. Tom Emmer (R-Minn.), co-chairman of the Congressional Blockchain Caucus, who has previously criticized the “overregulation” of crypto, appeared to echo Peirce’s sentiment, retweeting it with the “finger pointing down” emoji.
The situation is obviously not good when even the SEC’s Commissioner Hester Pierce is speaking out against the actions of the SEC.
The SEC is a regulatory agency with an enforcement division, not an enforcement agency. Why are we leading with enforcement in crypto?
— Hester Peirce (@HesterPeirce) May 3, 2022
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