Hester Peirce, also known as “Crypto Mom,” has criticized the SEC’s closed-door policy, arguing that it stifles innovation in the crypto industry. She called for more positive engagement with crypto firms and fewer enforcement threats from the SEC.
Peirce’s remarks came during the annual SEC Speaks Conference on April 2, where she highlighted concerns about the SEC’s guidance on crypto custody, particularly focusing on Staff Accounting Bulletin 121 (SAB 121). Peirce criticized SAB 121 for being issued without input from the banking sector and argued that it excludes experienced banks and broker-dealers from the crypto custody business due to its capital implications.
Moreover, Peirce raised concerns about the potential treatment of assets if a custodian were to fail, suggesting that the assets could be treated as belonging to the failed entity rather than its customers.
Peirce also lamented the SEC’s closed-off approach to engaging with the public, especially regarding emerging technologies like crypto. She observed a shift in the agency’s culture at the top, which has impacted its interaction with the public.
Peirce emphasized the need for the SEC to restore open communication with the public, provide clear guidance, and support responsible innovation, including in areas like crypto custody. She suggested the creation of an advisory committee to better understand how rules operate in practice.
Paul Grewal, the chief legal officer of Coinbase, expressed support for Peirce’s remarks, endorsing her proposal to establish an advisory committee to enhance understanding of regulatory rules.
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