SEC Commissioner Hester Pierce Says U.S Should Follow U.K Footsteps in Crypto Regulation

Top commissioner of the securities and exchange commission (SEC), Hester Pierce has called on the U.S to imitate the U.K’s approach towards the crypto industry.  

In a letter on Wednesday, Pierce praised the Bank of England and the Financial Conduct Authority (FCA) of the U.K. for proposing a local “digital securities sandbox” (DSS), which is a way to experiment with blockchain technology “in the issuance, trading, and settlement of securities.”

Pierce also indicated her support for a proposed cross-border “digital securities sandbox” between the U.S. and the U.K. “I suggest that, contrary to the proposal, the DSS be open to US-domiciled firms,” Peirce wrote. 

She proposed a “micro-innovation” sandbox where American firms could test digital trading activity under their choice of either U.S. or U.K. regulations. The sandbox will then help both the UK and the U.S to develop better regulations for their local crypto industries.

According to her, a cross-border sandbox could allow experimentation with “fractionalization of assets” and “interoperability across different blockchains and tokens,” among other things.

Pierce stressed that the sandboxes will be beneficial to the private market as well by allowing them a space to experiment with the crypto industry without any fear of regulatory crackdown. This she said will enable “smaller, disruptive firms” to enter the industry and compete favorably.

“Even though I tend to be more of a beach than a sandbox type of regulator, sandboxes have proven effective in facilitating innovation in highly regulated sectors,” Peirce wrote. 

Proposal to Face Resistance 

A professor at the University of Kentucky paw professor Bryan L. Frye commenting on the proposal said though it is a good proposal, it may not receive the necessary support because of the current leadership of the SEC.

“I think it’s a good idea, especially because the SEC could learn a lot about regulating the crypto market by allowing it,” Frye said. “However, I’m pretty skeptical that Gensler will support it and so it strikes me as unlikely to happen.” 

Another professor, Todd Phillips agrees that the proposal may not see the light of day. “Commissioner Peirce’s cross-border sandbox proposal has no chance in Chairman Gensler’s SEC,” concurred Phillips, who is an assistant law professor at Georgia State University. 

SEC Stance on Crypto

The SEC under Gary Gensler has consistently shown that it is not in support of cryptocurrencies. The industry has come under intense pressure under him, and the agency has always explored ways to bring anti-crypto laws.

Indeed, it will be difficult for the agency to support Pierce’s proposal given its existing sentiment against the industry, unless there’s a change of leadership.