Hester Peirce, also known as the United States Securities and Exchange Commission (SEC) “crypto mother”, has supported a stablecoin regulatory framework that allows for failure.
Peirce was asked to speak at an online panel hosted by the Official Monetary and Financial Institutions Forum on Thursday. He has been a long-standing advocate for crypto and was asked to explain the U.S. regulatory actions in relation to it.
Peirce said, “One area we might see some movement around stablecoins,” and that’s something that has received a lot attention this week: ”
“It’s one area in crypto that’s had quite a moment, and there’s lots of stablecoin usage. Therefore people are asking themselves if we would like to have some regulatory framework if this becomes even more important.”
Peirce stated that she has urged the SEC, through its regulatory power, to exempt certain technologies from regulation. She believes this would allow for significant experimentation.
We must allow for failure, because it is part of learning new things. Our framework allows for this kind of trial-and-error. It is my hope that we will make use of it for this purpose.
Officials in the U.S. Capital mentioned the depegging the algorithmic USD stablecoin TerraUSD early this week. Janet Yellen, United States Secretary for the Treasury, stated at Tuesday’s Senate hearing that a “consistent federal framework” for stablecoins must be created in light of the current situation.
On Thursday, Yellen stated that the threat of stablecoins being de-pegged from the USD was not present as they are not yet at a level where a price fall would be a concern. According to CoinGecko, the market capitalization for the top five USD stablecoins currently exceeds $154 billion. This is approximately 11% of the total $1.36 trillion cryptocurrency market cap.
Related: At the ISDA meeting, Chairs of the CFTC and SEC discuss crypto regulation
Peirce spoke out further about the regulatory environment for stablecoins. He said that regulators need to keep in mind that the term can be used for a wide range of assets.
“You might call a stablecoin, but one stablecoin may look different from another. It’s important to understand that crypto has a lot to offer, making it hard to create a regulatory framework.
She said that regulations were meant to “cover what is currently available” and “what will be possible tomorrow […], but that it was not always easy.”