SEC’s Hester Peirce Demands Clearer Rules for Crypto Industry

Speaking at the SEC’s “Know Your Custodian” roundtable on April 25, Peirce described the situation as playing “the floor is lava” in the dark, where financial firms must tiptoe around crypto assets without clear regulatory guidance.

Peirce criticized the uncertainty facing investment advisers and brokers, who are often unsure whether certain crypto assets qualify as securities or which custodians meet legal requirements. She warned that forcing firms to navigate blindly not only stifles innovation but makes it nearly impossible to develop a strong crypto market. “It’s time to flip on the lights and build real walkways over the lava,” she said.

Commissioner Mark Uyeda echoed her concerns, suggesting that firms should be allowed to use state-chartered trust companies as qualified custodians for crypto assets, which could offer clearer pathways for compliant operations.

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Meanwhile, newly appointed SEC Chair Paul Atkins signaled a broader shift in regulatory tone. Praising blockchain’s potential for cost reduction, risk management, and transparency, Atkins emphasized that his goal is to create a clear and practical regulatory framework — a stark contrast to the more combative approach of his predecessor Gary Gensler. Atkins promised closer collaboration with Congress and the Trump administration to bring about rational crypto rules that support innovation instead of blocking it.

The SEC roundtable made it clear that while there is growing consensus among some regulators about the need for reform, the path forward remains complex. Crafting policies that encourage responsible growth without leaving investors exposed will be a delicate balancing act, especially as crypto technologies continue to evolve rapidly and traditional financial structures struggle to adapt.

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