Renegade SEC Commissioner Wants To Save Crypto: Live With Hester Peirce, Nick Gillespie, and Zach Weissmueller

Join Reason on YouTube and Facebook on Thursday at 1 p.m. ET for a discussion of what the SEC's settlement with crypto giant Kraken means for the future of decentralized finance

Zach Weissmueller and Nick Gillespie | 2.15.2023 2:40 PM

The Securities and Exchange Commission (SEC) charged Kraken—America's third-largest cryptocurrency exchange by volume—with offering an unregistered security last Thursday. As part of a settlement, Kraken agreed to immediately cease offering interest-bearing "staking" services to U.S.-based customers and pay a $30 million fine.

But one SEC commissioner, Hester M. Peirce, published a forceful dissent, calling the SEC's action "paternalistic and lazy" and questioning "whether SEC registration would have been possible" given the murky framework the agency offers.

Join Peirce and Reason's Nick Gillespie and Zach Weissmueller for a live discussion of the regulatory threats to cryptocurrency this Thursday at 1 p.m. ET. Watch and leave questions and comments on the YouTube video above or on Reason's Facebook page.

This week's The Reason Livestream is produced by Adam Sullivan.

Show notes:

SEC press release on Kraken enforcement action

SEC Commissioner Hester Peirce's dissent

CNBC: "SEC commissioner Peirce publicly rebukes her agency, Gensler on crypto regulation."

SEC Commissioner Gary Gensler on crypto staking

CNBC: "SEC's Gary Gensler on Kraken staking settlement: Other crypto platforms should take note of this"

Kraken CEO Jesse Powell responds to SEC head Gary Gensler

FTX Meltdown and the Future of Crypto. Live With Kraken's Jesse Powell

"Operation Choke Point 2.0 is Underway, and Crypto is in its Crosshairs," by Nic Carter in Pirate Wires

Coin Desk: "SEC Proposal Could Bar Investment Advisers From Keeping Assets at Crypto Firms"

The Block: Total value locked into DeFi projects

NEXT: 3 Reasons To Abolish Social Security Now!

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Diane Reynolds (Paul.) 2 years ago

So serious question, and I'm really trying to stay neutral here... while I'm not trying to find a way to "support" or agree with the SEC action in this specific case, and just responding to the headline specifically, how is protecting the exchanges "saving" crypto? Crypto is supposed to thrive in spite of government action, regulation, and/or exchanges.

If crypto can't survive without the exchanges, then it seems like we're back to arguing first principles or something... here... I guess.

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1. Overt 2 years ago
  
  Not all Crypto is designed to survive despite government. Many crypto tokens are designed with several assumptions- that there are exchanges to trade with and that users can easily exchange for dollars (and other tokens). Some crypto tokens in fact would not exist if there wasn't a government printing US Dollars.
  
  These alternative crypto schemes have different value propositions from just "here is a currency that isn't operated as fiat by the gubmint". For example, there are an entire class of tokens that facilitate currency swapping without a middle-man money-changer. There are others that facilitate the creation of distributed organizations. All of these assume the presence of governments if not requiring them outright.
  
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  1. Diane Reynolds (Paul.) 2 years ago
    
    Ok, so in this particular case of the SEC regulating the exchange, it's not specifically about Bitcoin, but about the exchange's ability to trade and do business with these alt-tokens, yes?
    
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    1. Overt 2 years ago
      
      Correct- in fact almost every one of these "Staking for Interest" services is not bitcoin, because they are based on some etherium (or other) blockchain crypto.
      
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      1. Diane Reynolds (Paul.) 2 years ago
        
        Ok, so in a way, this does exactly what I suspected, it puts us back to arguing first principles. To talk about "crypto" is like talking about "bugs" or "nuts" or "grains" or "meat".
        
        To get to the heart of the matter, when we talk about Crypto replacing fiat currency or having "this or that" particular effect on the way people transact, "crypto" is no longer an adequate descriptor. We need to be more specific and say, "Bitcoin" or "Dogecoin" of "Zuckerbucks".
        
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        Diane Reynolds (Paul.) 2 years ago
        
        For instance, imagine a crypto currency controlled by a "consortium" of Silicon Valley corporations. The same ones that can simultaneously ban a US president from their platforms, block an icky story about Hunter Biden's "dick pics" or restrict the reach of a few hundred well-respected epidemiologists who raise their hand at the beginning of a worldwide lockdown and say, "Um, point of order".
        
        Is this something that we'd desperately want to "save" from the SEC?
        
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2. JFree 2 years ago
  
  After over a decade, there are still basically no real world use cases for crypto. If there were use cases, then there would be ways for real-world value to be exchanged for crypto and vice versa without exchanges. Without use cases, the exchanges are the only way for 'non-crypto' value to enter the world of crypto.
  
  One of the few real world use cases I've seen is in Africa where crypto is being used to exchange local currency for intra-African trade. eg exchanging Ugandan shilling for Nigerian naira. In that case, it is stablecoin tokens not exchange tokens that are being used. If/when those stablecoins fail, I suspect the real world value there will switch over to some Africa-based reserve currency.
  
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Renegade SEC Commissioner Wants To Save Crypto: Live With Hester Peirce, Nick Gillespie, and Zach Weissmueller

Join Reason on YouTube and Facebook on Thursday at 1 p.m. ET for a discussion of what the SEC's settlement with crypto giant Kraken means for the future of decentralized finance

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