SEC Commissioner Fears 'Heel-Dragging' Will Stifle Crypto Innovation

Hester M. Peirce, a member of the Securities and Exchange Commission, is worried that the regulator is moving too slowly for the crypto ecosystem.

Addressing fellow regulators at the Securities Enforcement Forum in Palo Alto, California on Monday, Peirce said that one year ago she was concerned that the SEC "As one of potential regulators, would stifle its growth."

She wryly added: "I will admit today that I was very wrong, not about whether the SEC would stifle the industry's growth-it has-but in how it would do it."

On the regulatory side, "Hasty" is not the word I would use to describe the SEC's pace.

It is not the SEC's overzealous action that has stifled the crypto industry, but its unwillingness to take meaningful action at all.

Her primary concern is that while the SEC has done a great deal to reach out to fast-moving startups, the tools it uses to assess when regulations apply - including the Howey test for determining whether something meets the definition of a security - are still dangerously out-of-date.

To be sure, Peirce credited the SEC for being open and forward-thinking about communicating with startups.

The SEC's FinHub network has been leading in startup outreach and most recently held a meetup in Denver where blockchain companies came to speak directly with regulators.

The SEC has yet to provide guidance to the public or FINRA on any of the core questions.

"The U.S. securities markets have historically been the envy of the world; I do not want heel-dragging by the SEC in crypto to mar that well-deserved reputation."