Hester Peirce: A Revamped SEC May Be More Crypto-Friendly

SEC will fundamentally change its enforcement approach with a shift in personnel, according to Commissioner Hester Peirce.

“I hope we return to the understanding that we are a regulatory agency within the executive branch, not an executive body that does not engage in regulation,” Peirce noted at the Blockchain Association summit.

According to her, the Commission has “always leaned towards enforcement” regarding the crypto industry, but this approach will change with a new team.

Following the departure of current SEC Chair Gary Gensler, Peirce wants to focus on clearly defining the agency’s jurisdiction. Market participants need to “help find a path forward” that maintains business appeal while complying with the law.

“We have enough flexibility to make adjustments through exemptions, no-action letters, and other methods. […] I think there will be significantly more experimentation in this space,” the commissioner added.

Her colleague Mark Uyeda, who described the previous SEC approach as “a complete disaster,” sees the changes as an opportunity to fulfill the Commission’s tasks.

“There is a reason we engage in regulation, not pure enforcement,” he noted.

According to the commissioner, a responsible regulator should provide space for innovation, clearly communicate the rules, and explain how to follow them.

He hopes the SEC will cease to be “a scolding teacher” that bans everything and return to its prescribed role as a regulator.

Uyeda emphasized that in the Commission’s initiated legal proceedings, only agency staff and defense representatives participate, while the public remains unaware. In his view, legislative issues may concern a much broader audience that should join the discussion.

“That’s why we have the Administrative Procedure Act — to allow the public to comment on regulation. Ensuring this transparency is our responsibility to the American public,” Uyeda stated.

He added that even the commissioners themselves sometimes have no say in the Commission’s affairs because enforcement specialists draft ready-made recommendations without sufficient discussion.

Both commissioners agreed that enforcement measures might be appropriate in some borderline cases but are entirely unsuitable as a tool for creating extensive regulations.

They also noted that in early 2025, the Commission will operate with a limited number of members until the Senate approves new appointments. With the departure of Gensler and Democratic Commissioner Jaime Lizárraga, Republicans Peirce and Uyeda, along with Paul Atkins, nominated as the agency’s chair, will lead the Commission.

“Since three commissioners represent one party, I think Democrats expect that after the Senate confirms Paul Atkins, he will relatively quickly appoint someone from another political party,” said former SEC litigation attorney Teresa Goody Guillén.

By rule, no more than three Commission members can be from one political party. Atkins can appoint a Democrat, a Libertarian, or an independent candidate, but not another Republican.

In December, a group of American organizations urged the Senate to confirm Democratic SEC Commissioner Caroline Crenshaw for another term.