Mapping the Future of the SEC (There’s a Nonzero Chance Hester Peirce Takes Over)

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Please consider using a different web browser for better experience. Please enable JavaScript in your browser for a better site experience. Mapping the Future of the SEC (There’s a Nonzero Chance Hester Peirce Takes Over) Jun 26, 2020 at 18:15 UTC Updated Jun 26, 2020 at 18:28 UTC SEC Commissioner Hester Peirce – known as "Crypto Mom" to the community – could theoretically become acting chair of the agency if Clayton is confirmed as U.S. Attorney. (CoinDesk archives) Nikhilesh De Mapping the Future of the SEC (There’s a Nonzero Chance Hester Peirce Takes Over) The future of the U.S. federal securities regulator, and perhaps the direction of cryptocurrency policy, is up in the air. Last week, President Donald Trump announced his intention to nominate Securities and Exchange Commission Chairman Jay Clayton to the post of U.S. Attorney for the Southern District of New York, asking Congress to approve the one-time corporate lawyer to become one of the nation’s most powerful financial crimes prosecutors. If – and that is a big if – he is confirmed to become the new U.S. Attorney for the Southern District of New York, the president will likely appoint one of the remaining SEC commissioners as acting chair until Clayton’s successor is confirmed. Traditionally, the acting chair is the senior-most commissioner who belongs to the same party as the president, said Jerry Brito, Executive Director of industry advocacy group Coin Center. In this case, that would be Commissioner Hester Peirce , known to many as “Crypto Mom” for her open-minded stance on the technology. In other words, there is a possible timeline ahead where three of the top U.S. financial regulators – the SEC , the Commodity Futures Trading Commission and the Office of the Comptroller of the Currency – would be headed by industry-friendly faces. Already, CFTC Chairman Heath Tarbert has taken steps to bring some regulatory clarity to crypto, approving ether futures and defining certain regulatory questions. Acting Comptroller Brian Brooks , who began the year at Coinbase, proposed a federal payments charter for crypto exchanges just weeks into his then-deputy role. Calm down, though. “Possible” does not mean “probable.” It does not mean “likely.” And it sure doesn’t mean “guaranteed.” For one thing, Clayton’s nomination is contentious , and he might well not be confirmed to the new role, for reasons explained below. Further, the succession pattern Brito described is “not automatic,” he said. “There’s no rule that makes it automatic. That’s just custom.” It is also possible Commissioner Elad Roisman could get the nod. Commissioner Allison Herren Lee, a Democrat, is unlikely to become acting chair, owing to her party affiliation. At stake is the potential future for crypto regulation. Clayton has at various points in time expressed concerns about market manipulation and maturity, security and consumer protection. Peirce, in contrast, has advocated for a more relaxed approach, and has come out in favor of exchange-traded funds (of which Clayton’s SEC most definitely is not) and a safe harbor for crypto token projects to build before having to consider securities laws. D.C. Drama U.S. Attorney General William Barr announced June 19 that Clayton would take over for the now-former U.S. Attorney, Geoffrey Berman, who Barr said was stepping down. Berman immediately announced he was not stepping down, to which Barr responded that President Trump had fired him, to which the president said he hadn’t. Ultimately Berman resigned on June 20. A spokesperson for Clayton did not respond to a request for comment. However, Clayton said during previously scheduled congressional testimony he did not believe the nomination process would distract him from running the SEC. He said he put his name forward for the U.S. Attorney role around June 12, a week before Barr announced the nomination, but that he would remain “fully committed” to the SEC until the Senate moved on his nomination. “It was entirely my idea. It’s something I’ve been thinking about for several months as a continuation of my public service,” he said. “It’s a position that’s very attractive to me.” Seth Bloom, a longtime general counsel to the U.S. Senate Judiciary Committee’s Antitrust Subcommittee, told CoinDesk that Democratic senators are unlikely to approve moving Clayton’s nomination to the Senate floor. It’s “very unlikely” Clayton is confirmed, he said. The sentiment was echoed by two other Washington, D.C., insiders, one of whom pointed out there are few legislative days left before this year’s presidential election. “We’re not talking a lot of days before the election,” said one lobbyist, who works with lawmakers and asked for their identity to be withheld. “Congress isn’t going to be in town very much. It’s July and some of September.” If Trump wins the election, then “we can have a real conversation around that.” Blue slip Clayton’s nomination might also be held up by the Senate’s “blue slip” practice...