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Within the SEC, Hester Peirce is fighting for a future blockchain


"It's always time to change."

Unexpected words from a regulator, but then again, Hester Peirce, one of the five commissioners of the Securities and Exchange Commission (SEC) of the United States, is not an average regulator.

When he speaks of the disruptive role of cryptocurrencies, his words could pass for those of any aspiring blockchain destroyer.

"I am thrilled to see what will happen over the next 10 years, how our lives will be affected and I am excited to see how it will happen," commented the conversation in Washington, just a few blocks away from the truth. its best to slow down this transition, at least when it comes to cryptocurrencies.

However, unlike most Washington regulators, Peirce is blatantly optimistic about the changes the blockchain could bring to society.

It's not exactly a secret or that she feels that way. You probably know Pierce as "Crypto Mom" ​​- a nickname given after his notorious remarks that disagree with a SEC decision to reject a publicly traded fund (ETF) that offers exposure to bitcoin.

But Peirce's dissent did not merely challenge the disapproval of what would be the first vehicle traded in the stock exchange of its kind. It was also a call for bitcoin supporters who reject the arguments that the SEC used to delay a milestone in its market maturity.

For Pierce, it is an overcoming; she claims that it is not the regulators' role to tell investors where they should invest their money.

So, if the other SEC members see the crypt as a market that must be kept at a safe distance, Peirce's concern is that regulators risk taking the narrative around cryptic innovation.

"I say we'll give it a try," he says, staring.

In fact, the idea that has been selected for this list is a symptom of the problem in the eyes of Peirce, who tells CoinDesk:

"I do not want this world to be a world of regulators, I want it to be a world of entrepreneurs."

Create change from within

Of course, other regulators have said supportive things about the cryptocurrency in 2018.

Even Peirce's nickname is a nod to the Commodity Futures Trading Commission by J. Christopher Giancarlo, who earned the nickname "Crypto Dad" for his remarks in a US Senate hearing in which he framed the technology as a generational problem.

But if others have made similar comments with less effect, it is perhaps the reassuring tone of Peirce that separates it.

His voice always seems clear, even through the environmental chaos of a pizzeria D.C. Sitting back on the chair, she casually confidences of blockchain use in remittances, micropayments, forecasting markets, and more.

Within the SEC offices. Photo by Christine Kim for CoinDesk.

Although, if it sounds like a person who is about to jump to the private sector, Peirce, who has spent over a decade in the government before the SEC, clearly sees herself as a regulator first.

It is also the role of the agency itself that has amplified its actions. Due to the rapid rise in initial coin offerings – at some point in 2017, they even exceeded VC funding as a way to raise capital – the SEC needed a clear position on who can issue cryptocurrencies.

Still, it is less clear what the Peirce public emergency is about this question. For one, she alone is not able to overturn what has defined the decisions guided by consensus in the agency.

By labeling his dissent in an incremental step "to make the Commission a little more open to innovation", Peirce realizes that the SEC will not change its apprehensive attitude on the "overnight" crypt.

"I came to the SEC, having been here before, knowing it [regulators] they are not particularly good with innovation, "he says.

For 2019, she is eager to work on important "non-enforcement guidance" for cryptocurrencies, listing three different objectives for the agency: clarifying whether a cryptocurrency is a security or not, helping people determine when a cryptocurrency could move from security to something and help trading platforms understand when they do not meet the SEC requirements.

Peirce does not care if these efforts will be repaid; she believes they will, over time, and you believe her when she says it.

Ohioan in the heart

If he's out of place in the SEC, though, Peirce also feels like a stranger in Washington.

Despite having resided in the city for 20 years, Peirce does not consider the city as his home. He tells me that his heart is still in Ohio. "I still hope to return to Cleveland one day," he admits, flipping through a menu, "My family is still there, my parents are still there."

At the same time, Peirce feels attracted to the SEC for its key role in enforcing and creating the framework under which US capital markets operate.

These markets being a fascinating and powerful force in Peirce's eyes, his commissioner's goal since the beginning was and still remains an expansion of market access.

She says:

"The reason I took this job is because I think our capital markets are an extraordinary asset to the country and so I care about them, I think they're the key to unlocking people's potential … I want to see how we can make it easier for people, for a wide range of people, to use these markets ".

Peirce says that studying economics at Case Western Reserve University "radically changed" the way he saw the world. Going forward to earn a law degree in Yale, Peirce would spend almost a decade working in the early days of her career at the SEC as a lawyer and staff consultant.

From there, he continued to work for a period under the presidency of Senator Richard Shelby in the Committee on Banking Law, Housing and Urban Affairs of the Senate. Another crucial moment in Peirce's professional career was his work at Capitol Hill, which oversaw regulatory reform after the 2008 financial crisis.

The consequences of what economists now describe as the worst financial disaster since the Great Depression ultimately made Peirce think.

"What is broken in ours [financial] system? What causes this problem? … Are we responding in the right way? Are we getting the problems worse? "Churches.

The role of a regulator, now Peirce believes, is to ensure that regulation is written in such a way as to "allow disruptive technologies to enter, allow innovators to enter and challenge the way things have traditionally been done".

Do not throw people down & # 39;

So, is he living up to that ideal?

Waiting for the check, I start to look a little more about his role at the agency: "You are able to reveal if you were responsible for starting the reviews of the nine ETFs. who were rejected? "

Peirce's answer to my burning question is gentle but without movement.

"Some votes are divulged and other votes are not, this is a vote that is not disclosed," he explains.

As for that mystery, apparently, we only have our suspicions. Outside of Peirce's disagreement in July, he tweeted in August that the SEC would move to re-examine a decision that disapproved nine different proposals from the ETCO bitcoin, effectively breaking the news before the agency.

Showing a picture in which she is sitting with other commissioners. Photo by Christine Kim for CoinDesk.

Without any evidence to suggest that the review was submitted by one of the two bursaries that presented the proposals (as was previously done in the Winklevoss Bitcoin Trust), supporters of the cryptic sector could only assume that "Crypto Mom" ​​was behind the action.

Nor do we know how this conversation is progressing within the SEC itself, as the result of the review has yet to reveal. In addition, an additional proposal – presented by the monetary management company VanEyk and the startup SolidX – remains undecided by the SEC, which has until the end of February next year to approve or reject.

As such, there is still hope in the new year for investors who want more exposure to bitcoins through traditional exchanges.

At the same time, the possibilities for regulatory approval are not exactly high, especially in view of a recent speech by SEC President Jay Clayton.

Speaking to the CoinDesk Consensus: the November Invest conference, Clayton warned of persistent market manipulation concerns, excluding the widespread support of regulators for the sale and trade of a bitcoin ETF.

Only this year saw both the launch of an official investigation by the US Department of Justice in cryptocurrency trading, and the publication of new academic research suggesting evidence of illicit tactics on the market to increase the price of bitcoin, regulators like Clayton at the SEC are hesitant to approve cryptographic titles.

"How's that [manipulation] problem is addressed, I do not have a particular path. But it must be like that, "Clayton said at the conference.

Collecting the same concerns with Peirce now, she begins to question "the statutory authority" that she and her fellow commissioners have in the SEC to consider the behavior of the underlying bitcoin markets.

Shaking my head, she tells me:

"The underlying markets are often very messy: minerals are often extracted and traded in exchange in some parts of the world where we have no say or have a regulatory authority on … From my point of view, we should not have to look at it, the community itself is examining these problems. "

"If the regulator is too involved in the way everything works, they can ruin everything," insists Peirce.

Getting up to collect his things, Peirce accidentally runs into one of the restaurant servers, a move he quickly uses to emphasize his point.

"See! Regulators should be in the background, not to overthrow people."

Go ahead at full steam

Coming back to the SEC, Peirce shows me an image of a steam ship, not exactly an example of "avant-garde" technology. But Peirce's image is a useful reminder of "how technology changes" over time.

Thinking nowadays, Peirce compares the current market trends in the cryptocurrency sector with a healthy "spewing" process.

Commissioner Hester M. Peirce. He swore on January 11, 2018. Photo by Christine Kim for CoinDesk

"I think people are increasingly sophisticated in thinking: these are the signs of a potentially successful project and these are the hallmarks of one that is nothing but a scam," he notes.

Likewise, it also seems to understand that the SEC needs to take time, undergoing a lengthy review process before coming to a conclusion.

"Do not sit on the edge of your chairs waiting for something to happen from the SEC. You have to get on with what you're doing," advises Peirce.

For his part, Peirce states that he will continue to work "in the background" to allow innovation in the crypto markets to flourish.

How much will these efforts be impacting? Time will tell. But if this resolution is not already shared by almost all innovators and entrepreneurs already in the cryptographic space, this is definitely next.

She concludes:

"I suspect I will continue to want things to move faster than they sometimes do."


Art by Diego Rodriguez (Plasma Bears by @NeonDistrictRPG)

Original photos by Christine Kim for CoinDesk

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