SEC Commissioner Peirce Criticizes Crypto Regulations at ‘SEC Speaks’ Event

• Peirce is well-known for her dissenting opinions within the Commission.
• There is less meaningful engagement between the SEC and stakeholders as per Peirce.

Practicing Law Institute’s “SEC Speaks” event featured U.S SEC Commissioner Hester Peirce, who criticized the agency’s regulatory stance on the cryptocurrency sector, with an emphasis on Staff Accounting Bulletin 121 (SAB 121).

Peirce, who is well-known for her dissenting opinions within the Commission, brought attention to the difficulties caused by crypto regulations like SAB 121 and associated oral guidelines. According to her, these regulations make matters more difficult for businesses that handle the storage of digital assets.

Less Meaningful Engagements

Companies that hold cryptocurrency for their clients are required by March 2022’s SAB 121 to report this asset as a liability on their balance sheets. Legislators and the crypto community are at odds over whether or not this order will deter banks from providing custody services for digital assets.

Due to its far-reaching consequences, the bulletin has been the target of legislative efforts to have it revoked on the grounds that the Commission alone should be responsible for passing such significant regulatory changes, rather than via staff-level recommendations.

Commissioner Peirce said that there is less meaningful engagement between the SEC and stakeholders and that the agency’s connection to the public has become weak. A shift in agency conduct away from encouraging proactive communication and openness has led, as Peirce notes, to the ignoring of some public queries and concerns over crypto regulation.

Following the uproar over SAB 121, the House Financial Services Committee moved to question the bulletin’s validity. Committee members recently decided to go forward with a resolution that would repeal SAB 121 if it were to succeed in the House and Senate.

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