Esther Pierce: SEC is completely closed to cryptocurrencies

U.S. Securities and Exchange Commission (SEC) Commissioner Esther Pierce, known as “Cryptomama” for her positive attitude toward cryptocurrencies, criticized the agency’s guidelines for storing digital assets.

Speaking at the annual SEC Speaks conference, Hester Peirce said a “particularly noxious weed” had grown in the “secret garden” of SEC regulations. We are talking about Accounting Bulletin 121 (SAB 121), presented by the regulator back in March 2022. SAB 121 sets out accounting guidelines for institutions wishing to hold crypto assets. Notably, SAB 121 prohibits many banks from holding digital assets on behalf of clients.

Pierce said SAB 121, which was issued without the participation of the banking industry, does not protect investors at all. On the contrary, the document discourages sophisticated banks and broker-dealers from holding cryptocurrencies due to possible negative consequences for their capital. In addition, in the event of bankruptcy of the custodian, it will be possible to assume that the stored crypto-assets belong to him, and not to the clients. This deprives cryptocurrency investors of the ability to securely store assets, as banks have become shunned from the crypto industry, Pierce added.

On March 1, the House Financial Services Committee (HSFC) voted on a resolution to repeal the bulletin. Republican Congressman Tom Emmer called SAB 121 proof of how SEC Chairman Gary Gensler is biased against cryptocurrencies.

At the beginning of the year, the SEC commissioner was encouraging: in order to get approval for applications to launch exchange-traded funds tied to ether, crypto companies would not have to sue the agency. Pierce recently said she supports decentralization of the US financial system.