- Hester Pierce lashed out at the U.S. SEC for having a laggard approach in framing crypto laws.
- The SEC has no clear guidelines for crypto firms to operate their businesses.
Crypto-friendly SEC Commissioner Hester Pierce, also popular as Crypto mom, has lashed out at the U.S. SEC for its $10 million settlement with crypto trading platform Poloniex.
On Monday, August 9, the U.S. Securities and Exchange Commission (SEC) announced that it has come to a settlement with Poloniex for trading unregistered securities between July 2017 and November 2019. The securities regulator further noted that the Poloniex crypto trading platform met the definition of “exchange” as per the securities laws.
However, the regulator added that Poloniex failed to register itself as a national securities exchange. Furthermore, it didn’t even get any approval of an exemption from the registration. Thus, its failure to do so was a violation of Section 5 of the Exchange Act. Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit wrote:
Poloniex chose increased profits over compliance with the federal securities laws by including digital asset securities on its unregistered exchange. Poloniex attempted to circumvent the SEC’s regulatory regime, which applies to any marketplace for bringing together buyers and sellers of securities regardless of the applied technology.
But the latest decision of the settlement by the SEC hasn’t gone well with Commissioner Hester Pierce. She called out the U.S. SEC for its opaque regulatory measures. As a result, crypto firms operating in the U.S. have no proper direction or rules to operate.
Hester Pierce slams the U.S. SEC
Following the SEC’s announcement of the settlement, the crypto mom released a public statement. She criticized the U.S. SEC for being laggard in its approach to handling crypto regulations. Hester Pierce noted:
Sure, Poloniex could have tried to register as a securities exchange or, more likely, as a broker-dealer to operate an alternative trading system (ATS), a type of regulated trading venue that might be better able to accommodate non-traditional securities. Had it done so, it likely would have waited . . . and waited . . . and waited some more.
She further noted that the SEC has failed on its part to clarify the operational rules to crypto businesses. This primarily includes determining whether if an asset is a security. Furthermore, the SEC has no clear guidelines on the licenses and exemptions required to operate a crypto exchange.
“Given how slow we have been in determining how regulated entities can interact with crypto, market participants may understandably be surprised to see us come onto the scene now with our enforcement guns blazing and argue that Poloniex was not registered or operating under an exemption as it should have been,” added Hester Pierce.
On Monday, the SEC also announced the settlement of its cases with decentralized finance (DeFi) platforms operating in the space. The U.S. SEC charged DeFi-lender Blockchain Credit Partners for fraudulent offerings and selling $30 million worth of unregistered securities.
Read More: SEC makes the first DeFi settlement against Blockchain Credit Partners
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