SEC's Hester Peirce Calls Crypto Self-Custody a 'Very Fundamental Right'

SEC Commissioner Hester Peirce on Sunday criticized rules that restrict ordinary Americans from investing in businesses and crypto projects while allowing them to gamble freely.

Pierce argues that regulators should protect investors without “infantilizing” them.

How Can Regulators Ease Crypto Investing?

Peirce, who is preparing to leave the SEC, told Scott Melker in an interview that regulators should make it easier for entrepreneurs to raise capital and grant investors’ the freedom to decide where they put their money.

"You’re not allowed to put your money into something that you believe in," Peirce said, contrasting that with the ability to "run down to the casino" and spend the same money.

Peirce outlined two approaches for raising capital:

• Let crypto projects raise up to $5 million under a simplified startup exemption.
• Or allow projects to raise up to $75 million, but with stricter requirements.

The framework could also allow a token to eventually separate from the investment contract used for its initial sale once the project’s promised work is completed.

However, previous rules created the wrong incentives as projects claiming their tokens had no utility could face fewer regulatory hurdles than those trying to build useful products.

Will Tokenized Stocks Help?

Peirce said the SEC innovation exemption could allow tokenized stocks to trade through automated market makers on permissionless blockchains.

Tokenized securities would retain the same rights as underlying shares, including voting and dividends, while issuers could object to tokenization.

Peirce said the U.S. should encourage such experimentation rather than push it overseas. Despite the CLARITY Act’s failure, she said the SEC can still address several crypto issues under its existing authority.

Peirce called crypto self-custody a "very fundamental American right," saying people should be free to hold assets themselves or use intermediaries.

Regulators should preserve the right to self-custody and use decentralized tools, while applying different rules to financial intermediaries, the SEC Commissioner concluded.

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