Is the SEC taking a step towards modernising the rules on crypto?

Sat 29 May 2021 ▪ 12h31 ▪ 3 min read — by Maximilien Desbordes

Crypto cannot adapt to current regulations; it is up to the regulations to adapt to crypto. In this light, Hester Peirce of the US Securities and Exchange Commision (SEC) is sending an encouraging message to the crypto space.

Modern regulation for a modern asset class

On 25th May 2021, at CoinDesk’s Consensus 2021 conference, US SEC Commissioner Hester Peirce suggested that cryptocurrencies could force regulators to modernise custody rules.

According to the Commissioner, custody is an important area for cryptocurrencies. However, it is tricky to apply current legislation to this asset class.

“The bottom line message I have is that we have work to do in modernising our custody rules all across the board,” she said, “I think, as with many other areas, crypto may force us to do that modernization faster than we otherwise would do.”

For Peirce, financial advisors have a responsibility to fully understand the asset class they advise their clients on. She explain this during a best practice exchanges for financial advisors who intend to allocate some of their clients’ portfolios to cryptocurrencies.

Peirce clarified that her comments did not in any way reflect the SEC’s thinking, were her own.

Ready or not, here crypto comes!

The SEC must make a decision on greenlighting a Bitcoin (BTC) Exchange Traded Fund (ETF). The agency said in May 2021 that Bitcoin’s (BTC) volatility could mean it is not yet ready to support an ETF.

Peirce is a long-time advocate of a calibrated approach to crypto regulation. This position is reflected in the latest version of its Token Safe Harbor proposal.

On the question of Bitcoin ETFs, Peirce considers that the main question is whether investors, who may not want exposure to crypto, are at risk operating outside the traditional securities framework when they invest in cryptocurrencies.

Peirce believes the market infrastructure could be ready to host a Bitcoin ETF. However, she did not comment on whether a Bitcoin ETF would be approved in the United States.

Some think this is a positive sign of sound regulation for cryptocurrencies, while others fear the arrival of the big bad wolf. The threat of tighter regulation is causing panic and volatility in the markets, legitimising the need for regulation. The perception of positive regulation could be a strong tailwind for markets, who always operate within a robust legal framework.

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Maximilien Desbordes avatar
Maximilien Desbordes

Ayant évoluer dans l'univers du jeu video pendant près de 5 ans, je suis un vrai Geek et c'est tout naturellement que je me suis tourné vers le monde des cryptos.


The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

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