Exclusive interview with Commissioner Hester Peirce from the U.S. Securities and Exchange Commission
Q: Would you be able to share the key takeaways you would like the audience to gain from yesterday’s keynote session?
The key takeaway is that we as regulators need to have an open mind towards innovation, and towards people who are thinking creatively towards solving problems. At the SEC we've taken one approach, and at the conference yesterday we were able to hear from other countries how they approach blockchain and digital assets more generally. It was a really productive discussion and we all have a lot to learn from each other on this issue.
Q: Moving into the future, can we expect the U.S. government to be more proactive in providing clarity with regards to cryptocurrency laws?
I think that we need to, and that is what I'm hoping that we will do. We spent a lot of time over the last few years trying to learn more about crypto and blockchain. The benefit of that learning will ultimately translate in to a little more clarity, but it is a pretty slow process. I think we are still trying to get our hands around certain aspects of how the law applies in this area. And how it should apply in this area. So I will continue pushing for clarity, but it may take a little time.
Q: What do you think the US should value more, being an economically strong nation, or being a leading participant in the open, global, digital economy?
I think that those two things are not necessarily inconsistent. We want to build strong markets in the United States, because that increases prosperity, which in turn helps people, and that is what we ultimately want. We want people's lives to be better. So I think that we can do that on the one hand, but a piece of that is just being open to innovation. Our country has always been one where people with great ideas have come to develop companies, to build those ideas up. So I'd like it to also be a country where people come, have great ideas in the digital asset space, and build their digital asset projects in the US too. And obviously one of the benefits of this kind of technology is that it connects people from all across the world. You can have people in the US, and elsewhere, but we certainly don't want people to feel they have to go off shore to put one of those projects in place.
Q: At this moment, a lot of companies are moving out of the US because of the restrictions and the regulated space. What is the SEC's take or stand on that, and what measures will be taken to help stop the brain drain
Again, it is something that I am concerned about. I have talked to a number of people who are developing projects elsewhere, even though they love to be in the US, but can't because of the regulatory uncertainty. That is the best thing we can do, provide more certainty. We have taken some steps to be more open to talking with people about what they are working on. So we have for example peer-to-peer sessions that we run in different cities.
Q: How far do you think we are from that regulation clarity
It is difficult because there are a number of different areas where clarity is needed. I always caution people that a big agency like the SEC, any government agency, that has existed for a long time and has a lot of rules on the books, it can take a really long time to amend those rules. And to provide some new clarity. And one thing that I think a lot of people in this community don't realized, is that the SEC does a lot of different things. We've got a pretty packed agenda, so it is sometimes hard to find time on the agenda, even if you have a rule ready to go, to get that rule finalized. But I think it is good that we get pushed a little bit too, sometimes we can be too slow. That has been a criticism of mine. Innovation is happening, so the timeline is wrong, people want to move forward. And you need some more guidance to be able to move forward. I am sensitive to that and am working on pushing us forward.
Q: In your opinion or from your knowledge, is there enough cross-communication between the CFTC, SEC, and IRS on cryptocurrencies right now?
There is a lot of inter-governmental communication. And it is about a lot of issues and this is one of the issues people are talking about. Again, it is a little tricky because some of the questions in this area are about which jurisdiction, what are digital assets and what jurisdiction does it fit within. So it makes it really important for us to keep talking to each other. I talk a lot with my fellow Commissioners in the CFTC, and this is one of the issues that we talk about.
Q: We read that Robert A. Cohen, the chief of the Cyber Unit at the SEC, is leaving the agency next month after 15 years of service. What does this potentially mean? Is this a precursor of what is to come?
I'm impressed that you all were aware of the fact that he is leaving. He has been a very hard working staff member and we are sad to see him go, but it is very common for staffers to leave and decide to go and work at a law firm or elsewhere, but I don't know what he is actually doing when he leaves. But it is very normal. In terms of what it means for enforcement actions in this area, which is an area which he is concentrated on, someone else will step in to the extent that there are still enforcement actions. I think we have been pretty clear in this area. If there is fraud we are going after it. And we have also made it clear that we are going after unregistered offerings. So I think you should expect that those kinds of enforcement actions will continue as they have. I understand that there is often a lot of uncertainty about the enforcement side, and my point of view is that we really need to be pro-active as you mentioned earlier, in providing clear rules and guidance so that people know what it is they have to comply with. Then we can hold them accountable for not complying with it.
Q: United States President, Donald Trump, recently tweeted about his opinion of BTC and cryptocurrencies. While his opinion is that he is not a fan, it has brought BTC and crypto to the attention of people who may not have yet heard of these. In your opinion, do you think that cryptocurrencies will ever achieve the stability of the USD and will regulation of the space and crypto-assets achieve the greater good?
It is interesting when people ask me questions like that. I always say look, I am a regulator and not an innovator. So, I have ideas about where things might go, but I trust much more the sort of insights of people who are actually working on this technology. And about assessing its potential. I think the role for a regulator is to make sure that people can try these things. If they succeed, that's going to be because they had a good idea. And if they fail, because they had a bad idea. Not because regulations stood in the way. That is what I want to do. Open the doors to make sure we have a level playing field, people can put stuff out there, and we will see what works. That is really exciting and what excites me about this space. You've got a lot of people who have really interesting ideas about how the future might be different than the present. And they are trying to get those ideas in to place, to see how they work.
Q: Would you be able to share the next steps from the SEC we expect to be made public within the next 12 months, in regard to regulating frameworks for crypto and blockchain companies?
You know I can't share any inside information about what might happen. But, I think we will continue working on these issues. I think the staff is going to continue to engage actively with people. I encourage people to come talk to us. Come tell us what you are doing. If you think we don't understand something, or if we've done something wrong, come talk to us. You can talk to me, people on the staff, and I think that will help us move forward.
Q: Do you think creating a SEC Academy could help protect investors?
That is an interesting idea. We do try to think of creative ways to do outreach. I think the peer-to-peer events that we are doing, and the speaking of the staff who are working specifically on this issue, along with our FinHub, I think those are attempts to be a little bit of an SEC Academy. I like the description of that name, it's good. We do a lot of education efforts and other things. We are always thinking about ways to reach out. One thing that this whole crypto space has taught me, is that a lot of people just have no idea what the SEC is. So, sometimes getting out there just to explain what it is, what rules might apply to a particular space, can be helpful. So I think that is a great suggestion.