Welcome to another episode of 51 Insights. Today, a live session with the one and only Commissioner Hester Peirce. Hester, welcome to the show.
Thanks, Mark. It's great to be with you. And I of course have to start out with my disclaimer, which is that my views are my own views as a commissioner, not necessarily those of the SEC or my fellow commissioners.
Yes, thank you for that. And before we start, I actually want to do a short introduction for everyone who's joining us today. In 2018, when the SEC rejected the Winklevoss Bitcoin ETF, one commissioner published a blistering dissent that went viral overnight. Her Twitter followers went from 700 to 10,000 in a few hours. The crypto community gave her a nickname, the crypto mom. She told them to stop. For the next six years, she dissented. She wrote satirical screenplays in official SEC documents. She wore protest t-shirts during commission meetings. She quoted the cypherpunk manifesto from a government podium. She told her colleagues repeatedly that regulation by enforcement was destroying America's innovation. They outvoted her every time. Then the administration changed and the woman who spent half a decade as the SEC lone dissenter became the architect of its entire crypto strategy. She now leads the crypto task force, co-authored Project Crypto, and just this week submitted token taxonomy to the White House that could define which digital assets are securities under US law. Her term technically expired. She's hinted she won't seek reappointment. She's racing against the clock and she's my guest today. Today we're going to find out whether the rules you're building can survive your departure and I'm delighted for this conversation today.
Well, thanks for having me. It's great to be here.
So you quoted the cypherpunk manifesto from the SEC podium. You said the government shouldn't be an uninvited stranger in people's financial houses. How do you go to work every day for an agency whose entire model depends on intermediaries, disclosure mandates, and actually the exact surveillance infrastructure you're publicly arguing against?
I think that having the opportunity to shape policy in the United States is a huge privilege and it's one that I've been really blessed to have now for the past 8 years. And I think that sometimes people look at me and they say, well why are you a regulator Hester? It sounds like you don't like regulation. My view is there's a place for regulation but there's also a place for freedom and we have to figure out how to marry those two things together. And it's really important for us to be thinking about that every day as regulators. We have a mandate from Congress which we have to fulfill. But given that we're an American regulator, we also are informed by the Constitution and by the principles of freedom, individual liberty, and the ability of people to make choices for themselves and their families. And so I actually find it to be invigorating to be able to try to bring those two things together. Now, as you point out, the SEC really is a reaction to the fact that our financial system is full of intermediaries, and sometimes those intermediaries do things that are harmful to their clients, lie to them, they might take their money, they might be careless with their money or their assets. And so, there's a regulatory framework that's grown up to protect investors and to protect customers of broker dealers, investment advisors, and so forth. And now we're being confronted with a technology that enables people to do more things without intermediaries. And so it is a little bit of a new challenge for a regulator that was really designed to deal with intermediaries. But I think that again it's kind of an opportunity to say how do we offload some of the regulatory responsibility to this new technology? And where do we still need to have the regulation in place because the intermediaries are actually still there. And so I think it just makes the job more fun to have these challenges because you're really trying to figure out how does the regulatory framework fit in this new paradigm. We want to make sure that we're achieving the objectives that Congress laid out for us, which is protecting investors, keeping up the integrity of the marketplace and facilitating capital formation. And so that's something that we're doing, but we're doing it in light of the new technology.
Two years ago, you stood at ETH Denver and you said, 'If someone had told me I'd be standing at a crypto conference with the chairman of the SEC, I would have thought they were hallucinating.' So you weren't hallucinating. For the executives and allocators listening in today and who hear Project Crypto for the first time or aren't actually sure what it covers, what is Project Crypto? What has it produced so far and what is still coming?
Yeah. Well, it was a fun event a couple weeks ago when the chairman and I were standing there at ETH Denver. And I think that's one of the real joys of this past year has been the opportunity to work with the chairman, first acting chairman Mark Ueda and now chairman Atkins for most of the past year, who really care about getting crypto regulatory policy right. And so the chairman's Project Crypto is about providing some clear guidelines about what lies outside of the SEC's jurisdiction, what lies within the jurisdiction, and then how regulated entities in our jurisdiction can engage with tokenized securities and other tokenized assets. I think adding a richness to this project is the relationship with the Commodity Futures Trading Commission which is now being headed by the former chief counsel of the crypto task force Mike Selig. And the project intends to help people in the industry figure out who their regulator is and then figure out what the regulation looks like. And then I think we will all be in a better place where people who are trying to build things can just build things understanding what the framework is and figuring out where they want to fit within that regulatory framework. If you are trying to do tokenized securities obviously you'll be within our space but many crypto assets are not securities and so that activity will be within the CFTC's space. And of course this is all done against the backdrop of the legislative efforts to come up with regulatory clarity. The Clarity Act negotiations are ongoing, but I think having that legislative framework in place will just add a durability that will make people even more confident to build here.
Yeah. Speaking about the Clarity Act, two things happened this week. The first is the SEC submitted its token taxonomy to the White House. The token taxonomy outlines how certain crypto assets and related transactions could fall under federal security rules. And the second thing is that happened not this week but in the last week the Clarity Act stalled in Senate because the banks don't want to have the stable coin yield compromise. What was that submission to the White House this week? And is the SEC now building a regulatory framework because Congress can't?
No, we have authority already under our existing securities laws and that's something that we've been working with over the past year. The chairman has alluded to the taxonomy in speeches for example and so we're really just looking to flesh out how we're thinking about the taxonomy in light of the laws that we already have. And so it really is a parallel track as opposed to saying we're trying to replace what Congress is doing. No, what we're doing I think aligns very very nicely with what they're working on.
And can you just outline that for us a little bit. What do you define in that taxonomy? And what's...
Well, I'm going to say you're going to have to point you back to a speech that the chairman gave and I don't remember when that was, but earlier, I guess it was in 2025. He gave a speech kind of outlining a taxonomy, but I think you should really hold on and see it when it comes out, which I hope will be soon.
You also famously said that the crypto road trip should be more enjoyable and less risky. When the crypto task force launched in January 2025, now we're a year in. Are we on a highway or still stuck in traffic?
The Howey Highway. I think that we are on the highway. There have been some, I would say, traffic jams sometimes that have slowed us down. So we are making progress. Everything takes longer than one would hope but the task force really has managed to get a lot done. And it's not just the task force at the SEC. We have a dedicated group of people on the crypto task force, but we're working with staff all across the agency and people have been working very hard. The agency has a lot of priorities, but a lot of effort has been spent around crypto. You've seen that in statements that have come out, staff statements about things that don't fall within the SEC's jurisdiction. You've seen that in no action letters that have come out. And you've seen that in statements like we have a statement on tokenization that came out recently that I think really help people understand how we're thinking about things. You will see that in the taxonomy that's coming out where we'll help people understand how we're thinking about what an investment contract is when it ceases to travel with a token. So I think that you're seeing that work. Would I like to see rules done already? Would I like to see more things already finished? Of course I would because I'm an impatient person. But we are making a lot of progress.
Yeah, you're an impatient person, but you've also been with the SEC for a long, long time. And you've seen how the SEC evolved from almost an anti-crypto stance a couple of years ago to now really proactive in bringing crypto regulation to the US. How have you personally experienced that shift and what do you think was the big unlock on the SEC side? How have those internal discussions changed in the last one or two years?
Yeah. Well, and I appreciate you framing it that way because I do think we went from as an agency from being anti-crypto to not pro crypto but proactive in the sense that we're trying to get to clarity. We're not trying to put our thumb on the scale in favor of any particular asset or even any particular technology. We want to open the doors so that the market can decide which assets and which technology it wants to use. So that has been a very exciting transformation because a regulator should never be in the position of trying to shape how the market develops in the sense of which products or which technologies it wants. But rather we should be in the position of a neutral arbiter that is trying to keep the regulatory barriers low enough that new competitors can come in who then may reshape the industry. But we want to make sure that that playing field is dynamic that people can come in. And so the change happened when the administration changed and we got new leadership at the top of the agency who really wanted to take a more proactive approach. And I think as I've been really pleasantly experiencing the staff at the agency has wanted to grapple with these difficult issues for a long time. And now they finally have the opportunity to do that and they're working very hard to grapple with complicated technical and legal issues. And so that's just been very exciting and invigorating.
I want to talk with you a little bit about legislation as well and particularly the Genius Act and the Clarity Act. The Genius Act was the big act of 2025 that unlocked stable coins in the US. From your point of view, what questions did the Genius Act answer for you and what did it leave open?
The Genius Act was very important in laying the groundwork for stable coins. And so stable coins are very important in DeFi, for example. And so I think that having that legislative clarity around what a payment stable coin is is very important. Many of the issues yet to be resolved through regulation are outside of the SEC's sphere because they really deal with the banking regulators are writing those rules. We still are working with our entities that we regulate as they think about how they can use or work with clients who are using stable coins. And so that's an area where we're working to provide clarity to them.
Mhm. And the Genius Act also explicitly says compliant stable coins are not securities. Does that actually resolve the jurisdictional question between the SEC and other regulators or are they still somewhat in gray zones where the SEC's authority could be asserted?
No, I mean I think that getting the legislative backing for a position that we already had which is that payment stable coins would not fall within our jurisdiction. I think that was very helpful for us. It was very helpful for industry as well. So I don't think that there's really a gray zone there.
Yeah. Okay. So let's talk also a little bit about the Clarity Act. The Clarity Act that's stalled in Congress right now. Crypto firms have been waiting for years for market structure legislation. If Clarity passes, is there a risk that it arrives too late? That the market has already adapted around the ambiguity in ways that make the legislation less relevant.
No, I mean I think that it's a big undertaking and I've always been impressed that Congress has taken it on. And the House has obviously come up with their version. And the Senate's working on its own version, but these issues are really hard and it's not surprising it will take a long time. Getting it right is important and I think if Congress can do that, then it will really form the basis for this sector of the economy for many years to come. And so, yes, we're all eager to get things settled as quickly as possible. But, as I just mentioned, I sometimes am impatient that things aren't moving faster here at the SEC. And I'm sure people working on the Clarity Act feel the same way in Congress. But these things do take time and you do need to get to the right place. And so I think that progress continues to be made in Congress and I'm looking forward to there being able to get to a final product which I expect to happen soon.
Yeah. You've lived through many phases in crypto. You've seen the rise of NFTs and the rise of DeFi and lots of different innovation and phases that we lived through in the past 10 years. And in the last two to three years, we also saw a president and an administration that almost weaponized this technology for their own advantage. How did that political involvement of the Trump administration change the view on crypto of regulators, change the view on the discussion you have at the SEC on whether this technology is something that's actually beneficial for America or something that we should treat with caution?
Yeah. Well, I mean, as I said at the outset, I speak for myself and I think I appreciated in the introduction you mentioned that I've been thinking about these issues now for a long time and my views really haven't changed in the sense that what we're trying to do is not pick technological winners or losers or product winners or losers. We're just trying to get to a place where we're not saying just because you call yourself crypto or just because you run on a blockchain, there's going to be a negative implication of that. It's like anything else. We want to give you the room to prove to customers in the marketplace that you have something worthy of them spending their time and money on. And if you can succeed in doing that, that's wonderful. And we want to make sure that there is the regulatory framework to enable that to continue. And so having an administration that is supportive of developing those guardrails for the industry I think is encouraging. I would say that some of the problems that we've seen that have been so painful for so many people have been a result of a bad regulatory approach. And some things like that really bring home to a regulator like me the consequences of getting decisions wrong. We should have tried to tackle these problems using regulation. Instead, we tried to use a one-off enforcement approach, which led to it being easier for bad actors to do bad things and harder for good actors to do good things. And the consequences were really, really bad. And so I'm hoping that now we can flip that and we can make it easier for the good actors who are trying to build interesting and good things and make it more painful for the bad actors who are trying to rip people off. And there are a lot of those people. And so we really have to be able to spend our resources and time going after the bad people and letting the good people do their good work with the regulatory clarity that we're developing.
Yeah. And I mentioned in the introduction there's a lot of personal involvement from your side to make crypto part of the American technology stack and part of the financial system. Something I mentioned is the surveillance state. Can you just elaborate on that a bit? What is your personal motivation to bring crypto to America? And how does that align also with your personal values?
Well, again, my goal is to maximize people's ability to make choices for themselves and their families. And so, I'm not again putting my thumb on the scale of any particular technology. I do care. I love this country. I care a lot about this country. I think what makes this country so wonderful is it really brings people together who care about freedom, about the dignity of each individual person, of the importance of each individual and the unique ability of each individual to contribute something to society. And so that's what binds us together as Americans. And so I want to make sure that the regulatory state reflects and respects that. And over time we as a society have relied more and more on the financial system to surveil American citizens. And I have pointed out that I think some of that is inconsistent with our fundamental principles and what we allow in other parts of our lives. And so I'd really like us to take a hard look at how we're doing surveillance in the financial system. I'd like us to rethink that. And it's difficult, right? Because we want to make sure that we're balancing the really important objectives of protecting our citizens and protecting our nation. But part of protecting citizens is really elevating their ability to keep their own lives private. And so I care a lot about that because I care a lot about this country and I do think that this country is extraordinary and different from any other place and so I want to keep us that way and that's really what motivates my concern on issues like this. And I think the value of a technology that allows you to disintermediate, that allows you to have more control over your assets and over your data, can be very helpful in reclaiming some of that territory. Now, I want to underscore that I don't think having intermediaries is bad. There are a lot of good reasons why someone might want to rely on someone else to help them make financial decisions, to hold their assets, to help them make trades or whatever it is. There is a place for intermediaries. But I do think that this is a moment when we can say let's look again at how we've constructed this surveillance apparatus and let's figure out if we have the balance right and this is a moment we can do that.
Yeah. So surveillance apparatus, some people would say that crypto was created for the exact opposite because crypto is transparent. It's on a blockchain. Bitcoin transactions are on a Bitcoin ledger transparently stored forever. Everyone can look them up on Ethereum as well on many public blockchains actually. Isn't this the exact opposite of privacy? And doesn't this allow a state or a government to surveil their citizens even more than in the traditional financial system that we've been used to?
Yeah. No, I mean that's a very good point and I think that people sometimes forget that about the technologies. The transparency is one of the values of it, but it's also one of the perils of it. And so that's why people are working on privacy innovation to figure out how you can layer on privacy on top of the technology. And my point to my fellow regulators is that we ought to embrace those privacy technologies because they enable Americans to use crypto in a way that's safe. And we want people to be safe. We want privacy protection to be the norm. And of course, again, we have to work on ways to enable the government to get information when it needs it to carry out its functions as a government. So, we want that to be able to happen, but the presumption should be that people are protecting their privacy. Yes, I mean, it's great you can get paid in crypto, but if everyone can see how much you get paid, that's a little awkward. And yes, it's great you can donate to organizations using crypto. But again, if everyone can see who you're donating to, that's a little awkward. And as Americans, we certainly don't want to assume that that's going to be the culture where we create this idea that everyone gets to see everyone else's transactions. So, privacy tools are being developed and they have a real function. And I think as they get married with this technology, they can again help us have that conversation about the importance of privacy and the role of government in protecting Americans' ability to protect their own privacy.
Another big narrative in crypto is equality and making the financial system more accessible. Partly through disintermediation, partly through decentralization and part of that narrative was memecoins. Memecoins were big last year and they were big for many reasons. A lot of retail customers or traders participated in that and some would say memecoins are a way for retail users to participate in those upswings. Others would say that's a total scam and is a way for people like the Trump family for example to take advantage of normal financial market participants. What's your take on that?
