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Clear crypto rules urgently needed as major companies embrace asset: SEC official

Stock Markets Feb 13, 2021 04:20PM ET
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© Reuters. FILE PHOTO: Commissioner Peirce participates in a U.S Securities and Exchange Commission open meeting to propose changing its definition of an "accredited investor" in Washington
 
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By Chris Prentice and Katanga Johnson

WASHINGTON (Reuters) - A clear cryptocurrency regulatory regime is urgently needed as major companies like Tesla (NASDAQ:TSLA) Inc, BNY Mellon (NYSE:BK) Corp and Mastercard Inc (NYSE:MA) embrace the alternative asset class, a top Securities and Exchange Commission (SEC) official said.

Hester Peirce, a Republican commissioner at the agency, also told Reuters in an interview that it was too soon to draw policy conclusions from a "Reddit Rally" in GameStop Corp (NYSE:GME) and other stocks, but it was "wonderful" that a new generation of investors was able to participate in the market.

Dubbed by crypto enthusiasts as the “Crypto Mom” due to her supportive stance on the asset class, Peirce has long advocated for regulators to create clear rules that would allow crypto assets to thrive without fear of breaking the law.

"It's not only that there have been calls for clarity for some time and that a new administration brings the chance to take a fresh look, but it also is a moment where it seems others in the marketplace are also taking a fresh look," she said.

Bitcoin hit record highs this month after electric car-maker Tesla said it had invested $1.5 billion in the cryptocurrency and BNY Mellon said it would help clients hold, transfer, and issue digital assets. Mastercard also said it would open up its network to some cryptocurrencies.

"That adds to the urgency of us taking some sort of action in this area to provide more clarity," said Peirce.

The market was plunged into crisis last month when Reddit users trading on low-cost retail platforms banded together to drive up the prices of GameStop and other stocks, squeezing hedge funds that had bet against those shares.

The resulting volatility triggered massive margin calls from “clearing” houses that guarantee trades, prompting several retail platforms to suspend buying in the affected securities.

The incident sparked outrage among lawmakers on both sides of the aisle. Vlad Tenev, CEO of trading app Robinhood, Ken Griffin, CEO of hedge fund Citadel LLC and others involved in the saga will testify before Congress on Thursday.

The SEC is examining the "gamut" of issues including market volatility, the role of retail brokers, and how the post-trade market functioned, said Peirce.

"To see new investors participating in the markets is a good thing and of course we want them to be educated and skeptical," she said, adding that a wide range of market participants could actually help improve price formation.

Clear crypto rules urgently needed as major companies embrace asset: SEC official
 

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Comments (2)
Art Fire
Art Fire Feb 13, 2021 8:22PM ET
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There is no stoploss on crypto.  Everyone can wake up tomorrow with 0 in their bank account.
Dennis Weidenbenner
Dennis Weidenbenner Feb 13, 2021 8:22PM ET
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that's right, I hope you didn't put in any more money than you can afford to lose. True with any investment.
Tom Jones
Tom Jones Feb 13, 2021 8:22PM ET
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Thanks for your FUD. Didnt buy BTC low enough?
John Healy
John Healy Feb 13, 2021 3:05PM ET
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Get ready, hodlers. Yellen wants a cut.
Monika Medves
Monika Medves Feb 13, 2021 3:05PM ET
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who dares wins
 
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