As the SEC continues its shift from crypto adversary to potential ally, one question looms large: could the Commission's embrace of digital assets endanger the very markets it's supposed to protect?
According to Commissioner Hester Peirce, the answer lies in staying in the agency's lane.
"I certainly think it's good for a regulator to understand its jurisdiction, and not to try to act outside of its jurisdiction," she said in a recent interview with Coinage, explaining the new regulatory-light approach the agency is taking towards crypto. "There are a lot of bad things that happen outside of the SEC's jurisdiction, and a lot of them really give me concern and I worry about them. But that doesn't mean it's my responsibility to fix them."
That line in the sand has become more relevant as memecoins, NFTs, and other assets find themselves edging closer to mainstream finance. Not to mention, more and more traditional financial players are eyeing an entrance into stablecoins, including the President Trump-aligned World Liberty Financial. But while some worry about potential spillover into traditional markets, Commissioner Peirce maintains that setting clear boundaries will be key, as well as reminding consumers of the risks. "You can't say just any time there's some kind of thing where you could lose money, the SEC gets to jump in, then…our jurisdiction is going to have no bounds at all."
“I think we shouldn't deny the fact that just because you slap the word crypto on something, doesn't mean that problems that we've seen in other areas are not going to crop up here. They could,” she said. “I think it's also a time for us to remind investors and consumers that, you know, you've got to exercise skepticism when you make decisions about what you're putting your money into."
Still, the question of confidence in U.S. markets is a valid one — especially as some crypto products begin to get wrapped into more familiar structures like ETFs. Peirce acknowledged the concern. "We do not have the ability to regulate the entire marketplace. We have a job, which is to make sure that the markets that we regulate are operating in a way that people feel investors feel comfortable investing."
Since the departure of former Chair Gary Gensler, the SEC has made a considerable shift in how it’s regulating crypto. For one, the SEC issued a memo that essentially clarified that memecoins aren’t securities, and thus, not in the SEC’s remit. As Commissioner Peirce has explained in the past, her take is that the agency should lean into letting people do what they want with their money. That doesn't necessarily mean anyone should see that as an endorsement of every new asset, though.