WASHINGTON (Reuters) – A clear regulatory framework for cryptocurrencies is urgently needed, as large companies like Tesla Inc, BNY Mellon Corp and Mastercard Inc adopt the alternative asset class, said a senior official at the Securities and Exchange Commission (SEC).
Hester Peirce, a Republican commissioner for the agency, also told Reuters in an interview that it was too early to draw political conclusions from a “Reddit Rally” at GameStop Corp and other actions, but it was “wonderful” that a new generation of investors was able to participate from the market.
Called by crypto enthusiasts “Crypto Mom” due to its favorable stance on the asset class, Peirce has long advocated that regulators create clear rules that would allow cryptographic assets to thrive without fear of breaking the law.
“It is not just that there have been calls for clarity for some time and that a new management has the chance to take a fresh look, but it is also a time when it looks like others in the market are also taking a fresh look,” she said.
Bitcoin broke records this month after electric car maker Tesla said it invested $ 1.5 billion in the cryptocurrency and BNY Mellon said it would help customers maintain, transfer and issue digital assets. Mastercard also said it would open its network for some cryptocurrencies.
“This increases the urgency for us to take some kind of action in this area to provide more clarity,” said Peirce.
The market plunged into a crisis last month, when Reddit users trading on low-cost retail platforms teamed up to raise the prices of GameStop and other stocks, squeezing the hedge funds that had bet against those stocks.
The resulting volatility triggered massive margin calls from “clearing houses” that guarantee trades, prompting several retail platforms to suspend the purchase of the affected securities.
The incident sparked outrage among lawmakers on both sides of the corridor. Vlad Tenev, CEO of the trading app Robinhood, Ken Griffin, CEO of the hedge fund Citadel LLC and others involved in the saga will testify before Congress on Thursday.
The SEC is examining the “range” of issues, including market volatility, the role of retail brokers and how the post-trade market worked, said Peirce.
“Seeing new investors participating in the markets is a good thing and, of course, we want them to be educated and skeptical,” she said, adding that a wide range of market participants could really help to improve price formation.
Written by Michelle Price; Editing by Alistair Bell