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SEC Commissioner Hester M. Peirce urged those "who belong to the legacy financial system" to "embrace innovation and find ways to bring new voices and new visions into your institutions."
In remarks at the Institute of International Bankers 2021 Annual Washington Conference FinTech Panel, Ms. Peirce described the risks associated with a legacy financial system that resists "new ideas, new entrants, and new technologies." She warned that:
- participants in the legacy financial system will use regulation to prevent competition from technology innovators;
- legislators and regulators may attempt to achieve policy objectives that expressly or implicitly pressure financial institutions to take actions that hinder the growth of the crypto industry;
- increased regulations may result in individuals taking steps to "avoid dealing with regulated financial institutions";
- the lack of regulatory clarity surrounding financial technology may discourage existing financial institutions from fully engaging with the financial technology industry; and
- resistance to innovation in the financial technology sector may persist.
Commentary
Commissioner Peirce highlights a need for the SEC to provide more clarity as to the treatment of digital assets under the securities laws and the appropriateness of cryptocurrency exchange-traded products. Ms. Peirce seemed optimistic that the elevation of FinHub to a stand-alone office in the SEC, along with the progress of other regulatory agencies, will help regulators encourage innovation and growth in this space, instead of standing in the way of them.
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