The Securities and Exchange Commission (SEC) appears set for a dramatic policy reversal on cryptocurrency regulation, potentially shifting from a historically adversarial stance to one that embraces innovation. An exclusive interview with SEC Commissioner Hester Peirce offers insights into the anticipated changes and the speed at which they might occur.
Commissioner Peirce, in a conversation, described a current atmosphere of “transition” and “optimism” within the SEC as the agency awaits the arrival of Paul Atkins, President Trump’s nominee to succeed current Chair Gary Gensler. While acknowledging a period of uncertainty during the transition, Peirce emphasized the potential for immediate action on certain key issues.
High on the agenda is a reconsideration of two significant SEC decisions concerning crypto ETFs: in-kind redemptions and staking capabilities for Ethereum ETFs. Peirce reiterated her support for these changes, previously voiced this summer, and expressed renewed optimism for their implementation under the new leadership. In-kind redemptions would enhance efficiency by avoiding unnecessary conversions of underlying assets to cash, while enabling staking for Ethereum ETFs would allow issuers to generate additional yield, aligning with practices already permitted in other jurisdictions like Europe. With over $10 billion in assets under management in Ethereum ETFs and over $120 billion in Bitcoin ETFs, the potential impact of these changes is substantial.
Peirce suggested that with a shift in the majority opinion among Commissioners, these issues could be addressed swiftly. “If it changes from a majority of Commissioners who don’t want things to go through to a majority of Commissioners who do want things to go through, then yeah, it’s easier,” she stated, noting a clearer path forward after Chair Gensler’s departure on January 20th.
While some immediate clarifications on crypto policy might involve the SEC ceding some regulatory ground to the CFTC or implementing a regulatory sandbox for experimentation, more substantial changes are expected following the confirmation of Paul Atkins as SEC Chair. Peirce, having previously worked with Atkins, lauded his commitment to due process, transparency, and investor choice, suggesting these principles will guide his approach to crypto regulation.
Peirce envisions a multi-stage approach to regulatory reform, including the potential use of no-action letters and exemptive orders to provide clarity and potentially classify some crypto transactions as falling outside the scope of securities regulations. This shift would mark a significant departure from the SEC’s current enforcement-heavy approach, which has seen numerous crypto companies receive Wells Notices for potential securities violations.
The Commissioner expressed enthusiasm for the potential about-face, stating, “There’ll be a lot of adjustments and a lot of things going on in those first weeks and months, but I think we can make some early progress.” Her ultimate goal for 2025 is a clear regulatory framework that allows the industry to focus on the technology and its potential, rather than grappling with regulatory uncertainty.
