Hester Peirce has stated that there must be room for trial-and-error and failure in the stablecoins regulatory movement.
Commissioner Hester Peirce, also known as the Securities and Exchange Commission’s (SEC) “crypto mom,” has endorsed a regulatory framework for stablecoins that allows for “failure.”
On May 12, Peirce, who has long been an advocate for cryptocurrency, was asked to speak at an online panel hosted by financial think-tank the Official Monetary and Financial Institutions Forum (OMFIF).
“One area where we might see some movement is around stablecoins,” Peirce responded, “that’s gotten a lot of attention this week.”
“It’s been one area within crypto that’s had quite a moment and there’s a lot of stablecoin use and therefore people are thinking down the road if this gets even bigger do we want to have some kind of regulatory framework?”
Peirce stated that she has urged the SEC to use its regulatory authority to grant exemptions to specific technologies, which she believes would allow for important experimentation.
“We need to allow room for there to be a failure because that is part of trying new things and our framework does allow for that kind of trial and error. I hope that we will use it for that purpose.”
The debugging of the algorithmic USD stablecoin TerraUSD (UST) earlier this week was mentioned by US officials, with US Secretary of the Treasury Janet Yellen saying at a Senate hearing on May 10 that a “consistent federal framework” on stablecoins is needed in light of the situation.
Two days later, on Thursday, May 12, Yellen stated that stablecoins decoupled from the US dollar posed no threat to the country’s financial stability because they are not yet at a scale where a price drop would pose a risk. According to CoinGecko data, the market capitalization of the top five USD stablecoins is currently more than $154 billion, or roughly 11% of the total cryptocurrency market cap of $1.36 trillion.
Speaking further on the regulatory environment for stablecoins, Peirce stated that regulators should keep in mind that the term encompasses a wide range of assets:
“You might say ‘stablecoin’ and one stablecoin might look nothing like another stablecoin. I think it’s very important to approach all the conversations in crypto with an understanding that there’s a lot of variation which makes it difficult to craft a regulatory framework.”
