The SEC Commissioner, Hester Peirce, criticized the current state of cryptography regulation in the United States, comparing it to the children’s game “The Floor Is Lava”, where companies must avoid direct contact with cryptographic assets while navigating unclear regulations. Speaking during the Gustodian Know Your Round Table on April 25, Peirce explained that companies engaging in the crypto must jump from an ill -defined regulatory space to another. She pointed out that the regulatory landscape is uncertain, with companies that do not know what cryptographic assets are considered to be titles and if activities such as the markup or voting rights could trigger violations.
Peirce’s analogy illustrated the confusion to which investment advisers face when determining what is considered security and which can act as a qualified guardian for cryptographic assets. She stressed that there are no clear directives, leaving companies to operate in darkness. This uncertainty, noted Peirce, makes it difficult for the cryptography market to develop in the current regulatory framework.
Mark Uyeda, another SEC commissioner, has echoed the concerns of Peirce and suggested that the SEC should widen the daycare options, in particular by allowing trust companies for limited to the State to serve as guards for cryptographic assets. Uyeda argued that without appropriate childcare services, alternative trading (ATS) broker systems would find it difficult to facilitate the crypto trade, which hinders market growth.
Peirce also discussed the need for regulations that recognize the differences between various digital assets. It argued that if certain cryptographic assets require qualified guards, others can be better suited to the auto-customodie. She warned of overly restrictive regulations that could suffocate decentralized transactions and have urged the dry to adopt a framework that recognizes the nature of the various cryptographic assets.
His comments came in the midst of broader discussions on the regulation of cryptography, the president of the SEC, Paul Atkins, expressing his support for clearer rules to allow the growth of the cryptography market. Atkins has also highlighted the potential advantages of blockchain, such as increased efficiency, risk reduction and greater transparency. He stressed the importance of working with market players and legislators to create a regulatory framework that aligns with the needs of the cryptographic industry.
Peirce and Atkins both criticized previous leadership under Gary Gensler for having contributed to regulatory uncertainty. Peirce has explained that more companies are involved in the crypto, there is an urgent need for clear guard solutions that comply with legal and regulatory standards. It argued that without clear directives on the classifications of guard and asset classifications, the American cryptography market will continue to deal with challenges in securely widening. Overall, Peirce and Atkins underlined the need for a more defined regulatory approach to allow the cryptographic industry to flourish while protecting investors.
