SEC commissioner criticizes crypto bailouts as ECB president calls for staking regulations 🚨 This article is 3 years old...
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SEC commissioner criticizes crypto bailouts as ECB president calls for staking regulations
SEC Commissioner Hester Peirce says the tough times in the industry allows people to know who is actually building a product that will stand the test of time.
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Updated: Jul. 24, 2022 at 11:47 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
U.S. SEC Commissioner Hester Peirce criticized crypto bailouts in a recent Forbes interview and said the current market crash could set the foundation for a more sustainable future for the industry.
According to Peirce, tough times in the industry reveal projects and products that will stand the test of time.
She added that the current market conditions provide a learning opportunity for regulators and market participants to know how the crypto market reacts to acute stress.
Peirce said:
“It is helpful for us to see the points of connection. It’s a moment, not only for market participants to learn but also for regulators to learn, so that we can have a better sense of how the market operates.”
She added that the SEC could learn more about the industry during market downturns like this than during bull runs. In her opinion, scammers will take advantage of market conditions, and the SEC could learn from that.
Commissioner Peirce condemns crypto bailout
Speaking about bailouts for distressed crypto companies, the SEC commissioner revealed that she does not support bailouts for the industry.
Peirce said:
“Crypto does not have a bailout mechanism. And that’s been perceived as one of the strengths of that marketplace.”
She also clarified that the SEC does not have the authority to bail out crypto companies, but even if the commission did, she would still prefer to ‘let these things play out.’
Due to liquidity issues, Crypto companies like Celsius Network, BlockFi, Three Arrows Capital, Babel Finance, and Maple Finance have recently been in the news.
BlockFi, on June 21, secured a $250 million credit facility from leading crypto exchange FTX to bolster its reserve sheets.
ECB President demands regulations for crypto lenders
Meanwhile, ECB President Christine Lagarde has called for the regulation of crypto staking and lending firms.
Lagarde said:
“Innovations in these unexplored and uncharted territories put consumers at risk, where the lack of regulation is often covering fraud, completely illegitimate claims about valuation, and very often speculation as well as criminal dealings.”
The ECB president has previously said that cryptocurrencies are highly speculative investment instruments that authorities must regulate.
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Oluwapelumi Adejumo
Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.
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BlockFi
BlockFi is a defunct cryptocurrency lender company which is currently in bankruptcy proceedings.
Three Arrows Capital
Three Arrows Capital (3AC), a Singapore-based crypto hedge fund, collapsed due to poor risk management, recklessness in dealing with business partners and a significant portion of greed.
Celsius Network
Celsius Network is a bankrupt cryptocurrency lending company that was founded in 2017 and headquartered in Hoboken, New Jersey.
Hester Peirce, known as the “Crypto Mom” for her pro-cryptocurrency and blockchain stance, was sworn in as Commissioner of the U.S.