Hester Peirce Explains What Crypto Still Needs Before She Leaves the SEC

Scott Melker (0:00)

Should the government ever have the power to tell you that you can't hold your own money, protect your financial privacy, or build software without permission? Today, I'm talking with SEC Commissioner Hester Peirce as she prepares to leave the agency after years of pushing for a radically different approach to crypto regulation. We get into the collapse of the Clarity Act.

Hester Peirce (0:18)

I did expect that it would pass. I was surprised with the outcome. A lot of work has gone into the Clarity Act. It's a big piece of legislation with a lot of moving pieces.

Scott Melker (0:28)

Tokenized stocks.

Hester Peirce (0:29)

I do think a lot of issuers will be very excited to see their securities traded in tokenized fashion. We want the United States to be a place where people can try this.

Scott Melker (0:38)

New fundraising rules, privacy, self-custody, developer protections, and why she believes America still has an opportunity to become the best place in the world to build. This is one of Hester's final conversations as an SEC commissioner, and it gets to the heart of what crypto regulation should actually protect. Let's go.

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Thank you so much for joining again, Commissioner Peirce. So it's been a wild time in the United States government, especially with regards to crypto. Perhaps we should start at the Clarity Act, which was debated, discussed for over a year, and sort of seemingly died with a bit of a whimper last week. So did you expect that the Clarity Act would pass? Were you surprised by the result? Was it in line with what you were thinking?

Hester Peirce (2:17)

Well, Scott, thanks for having me. It's great to be back, and I should start with my disclaimer, which is that my views are my own views as a commissioner, not necessarily those of the SEC or my fellow commissioners.

I did expect that it would pass, so I was surprised with the outcome. A lot of work has gone into the Clarity Act. It's a big piece of legislation with a lot of moving pieces.

And yeah, just many people had put a lot of thought into it. I think it would be helpful to have a market structure bill for crypto. I think it would be helpful across the board. It would be helpful for regulators. But we can do a lot even without having that in place. And so that is where we're turning our attention.

Scott Melker (3:05)

You said that you expected that it would pass. Why do you think that it didn't? Can you point to any...

Hester Peirce (3:10)

Oh, I mean, I'm just a regulator. And as I say, there are a lot of moving pieces and a lot of people with different parts of the bill they were interested in. So I don't know what the political cause of it's not having passed was. But what I can say is that we worked with folks in Congress on it. And so I was sitting as an observer watching how hard folks were working on it.

And so I don't know whether it will move forward at a later date. So that's something to watch as well.

Scott Melker (3:47)

So in the time leading up to the cloture vote, it seemed that both the CFTC and the SEC signaled that they were willing to move forward with or without the Clarity Act and were making plans to do so. And it did not take very long for that to happen. Right. So obviously, we had the innovation exemption proposed by the SEC this week. The CFTC has filed already.

We don't know what the language is, but obviously intends to do rulemaking as well. So it seems like everybody was well-hedged, that they were prepared for either outcome.

Hester Peirce (4:20)

Well, I mean, we have been using our authority to do things related to crypto now for over a year and a half, nearly two years. And so we're just continuing along doing that, using the authorities that Congress already gave us. And I think that's what we should be doing under the authority that we have is using it to try to answer some of the questions that frankly have been hanging in the air for many, many years now.