US SEC Commissioner Hester Peirce has criticized the agency’s enforcement-driven approach to cryptocurrency regulation following the dismissal of its lawsuit against Coinbase.
The case, which accused Coinbase of operating as an unregistered securities exchange, was dropped with prejudice on February 27. Peirce, a known advocate for clearer crypto rules, expressed her opposition to the SEC’s reliance on enforcement rather than policy-driven regulatory frameworks.
Peirce argued that unclear regulations harm both the industry and consumers, allowing bad actors to thrive while discouraging legitimate innovation. She specifically took issue with the SEC’s broad interpretation of the Howey Test, which she believes has created uncertainty in the digital asset space. The costly legal battles stemming from enforcement actions, she noted, have forced crypto firms to spend resources on compliance and litigation rather than innovation.
In response to ongoing concerns, the SEC has established a Crypto Task Force, shifting regulatory efforts toward structured policymaking rather than ad-hoc enforcement. Peirce welcomed this move, emphasizing that regulatory clarity should be shaped through formal policy divisions, not through lawsuits. However, she clarified that enforcement would still be used in cases involving fraud and other illegal activities.
Additionally, the SEC’s Division of Corporation Finance issued guidance clarifying that meme coins do not qualify as securities, though fraudulent activities related to them remain punishable. The SEC has also recently dropped enforcement actions against Opensea and Gemini while concluding its investigation into Robinhood Crypto without further action. These developments, alongside speculation regarding a potential resolution in the Ripple case, signal a shifting regulatory landscape for the crypto industry.
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