There is A Way Out Commissioner Peirce: FDR Showed Us The Way
The journey begins, but are we ready?
Today, we will comment on Commissioner Hester Peirce’s recent statement titled: The Journey Begins. More specifically, we will compare and contrast her statements with those of President Franklin Delano Roosevelt, also known as FDR, when he was instructing Congress to come up with some sensible securities laws while the country was reeling from the Great Depression.
Here is what Commissioner Peirce said:
[T]he new commitment to a better regulatory environment should not be viewed as an endorsement of any crypto coin or token. Regardless of whether those tokens or coins fall within our jurisdiction, the Commission never endorses any product or service; there is no such thing as an SEC seal of approval.
The grandparents and great-grandparents of today’s generation heard what was basically a replica of these words from FDR, 92 years ago:
Of course, the Federal Government cannot and should not take any action which might be construed as approving or guaranteeing that newly issued securities are sound in the sense that their value will be maintained or that the properties which they represent will earn profit.
So far, so good. Perfect alignment between Commissioner Peirce and FDR. However, it is exactly this point where Commissioner Peirce began taking things in a different direction. She makes the buying public her focal point:
Spinning up coins and tokens is easy. If people want to buy a token or product that lacks a clear long-term value proposition, they should feel free to but should not be surprised if someday the price drops. In this country, people generally have a right to make decisions for themselves, but the counterpart to that wonderful American liberty is the equally wonderful American expectation that people must decide for themselves, not look to Mama Government to tell them what to do or not to do, nor to bail them out when they do something that turns out badly.
Ok, we agree with all of that too. But what exactly is the government’s responsibility? It can’t be nothing, can it?
This is precisely where FDR’s message went in a different direction. After making it clear that the government is not in the business of holding the individual’s hand, FDR’s focus shifted to the government, offering what the government must do:
There is, however, an obligation upon us to insist that every issue of new securities to be sold in interstate commerce shall be accompanied by full publicity and information, and that no essentially important element attending the issue shall be concealed from the buying public. (emphasis added).
You know that we love infographics, so here we go again. The securities laws of the 1930s, and you can argue perhaps the entire country for that matter, is built on a three-legged stool. The American public has the liberty and responsibility for their actions, but only after the government makes good on its side of the deal: clarity.
So where is the disagreement here? Isn’t Commissioner Peirce also promoting liberty and accountability?
She absolutely does. The disagreement lies not in what Commissioner Peirce says, but rather, in what she does not say. People can HODL on to their crypto if they want to, but here is the missing question that matters:
What is the most important element that can absolutely not be
concealed from the buying public?
It is the fact that one can not invest in crypto. Let’s be clear. Purchasing crypto:
Is NOT investing.
Is NOT speculative investing, either.
IS Speculation (at any price)
Please tell the buying public that, Commissioner. Then, and only then, they can decide.
We are not asking you to:
Tell them what to buy or not to buy;
Tell them when to buy; or
Bail them out.
On those points, we agree. Don’t tamper with American liberty, it is what made America, America.
BUT, you still do have an obligation. It is the government's job to provide clarity. When people are purchasing crypto, you must tell them that they are NOT investing.
Anything short of that would simply be inconsistent with the SEC’s mission of protecting investors.
Just a couple of weeks ago, Commissioner Peirce followed up on her original release and issued a statement titled: There Must Be Some Way Out of Here. In it, she asked for public feedback:
Greater crypto clarity, however, requires the public’s input. We welcome input from anyone in the public with an interest in these topics, and a wide range of perspectives (including from skeptics) will make that input richer.
She made the same call on X as well:
We appreciate your request for feedback, Commissioner and we’re here to help. We are putting something together for you and will make sure it lands on your desk. (We will also share with everyone.)
