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SEC's Peirce says U.S. ‘shooting ourselves in the foot,' EU's MiCA ‘a model' for crypto regulation

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(Kitco News) - Hester Peirce, a commissioner at the U.S. Securities and Exchange Commission (SEC), believes that the European Union’s recently passed Markets in Crypto Assets (MiCA) framework would serve as a good model for crypto regulation in the United States.

“MiCA can serve as a model for us,” Pierce said while participating in a panel discussion at the Financial Times Crypto and Digital Assets Summit in London.

She added that the regulatory approach being taken by the UK could also inform the U.S. process.

“I share with you the approach of telling people ‘look, there are risks here, you can choose to opt into those risks or opt out,’ and then trying to figure out a regulatory model that allows for innovation,” Peirce said.

The European Parliament voted in favor of the Markets in Crypto-Assets (MiCA) regulation on April 20. MiCA lays out a framework for the European Union’s approach to regulating the cryptocurrency sector. Under the text of the legislation, the issuance of cryptocurrencies will be brought under the wing of institutional regulation, and it establishes a new regime for crypto-asset service providers across the EU’s member states.

“If we built a good regulatory regime, people would come,” Peirce said. “We’re shooting ourselves in the foot by not having a good regulatory regime in the U.S.”

She added that she's "not very optimistic about the regulatory system” in the U.S. providing clear regulatory guidance anytime soon.

Hester has been a vocal critic of the enforcement actions of her own agency, and has often come out forcefully and publicly against the positions of SEC chair Gary Gensler.

Following the April 14 announcement that the SEC wants to amend the definition of ‘exchange’ to include decentralized finance (DeFi) platforms that trade cryptocurrencies, Peirce released a response statement entitled “Rendering Innovation Kaput,” in which she criticized the agency’s proposal.

“Stagnation, centralization, expatriation, and extinction are the watchwords of this release,” she wrote. “Rather than embracing the promise of new technology as we have done in the past, here we propose to embrace stagnation, force centralization, urge expatriation, and welcome extinction of new technology. Accordingly, I dissent.”

After the SEC’s bombshell decision on Feb. 9 to charge the Kraken cryptocurrency exchange with the unregistered offer and sale of securities for its staking-as-a-service product, Peirce offered a comprehensive and devastating dissent against the agency’s move.

She said that in the current anti-crypto climate, “crypto-related offerings are not making it through the SEC’s registration pipeline,” and added that the regulator has been aware of these crypto staking programs for a long time.

“Instead of taking the path of thinking through staking programs and issuing guidance, we again chose to speak through an enforcement action,” she said. “Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating.”

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