Valerie Szczepanik, the SEC’s senior advisor for digital assets, told a crowd Friday at SXSW in Austin, Texas, “I do think if we hope to smell the crypto spring in the air, it will take people walking with the regulators.” In other words, she believes that regulation will boost the overall cryptocurrency market.
In a Q&A session with attorney Daniel Kahan of Morrison & Foerster LLP, Szczepanik explained that SEC regulation is intended to enable innovation rather than hinder it. Although, she did admit that regulatory guidelines were often behind the curve with new industries, like the blockchain, but that “The lack of bright-line rules allows regulators to be more flexible.”
She added that the principles-based approach allows more opportunities to arise from new technology, while respecting entrepreneurs’ desire to know whether they can or can’t run a business in full compliance with current securities laws. She told the audience, “I think if you were to propose a new regime of regulations in a precipitous way without really studying it, you might end up steering the technology one way or another.”
The stablecoin debate
Audience members asked her opinion about stablecoins, to which Szczepanik responded by saying that there are several arrangements that allow these tokens to maintain a relatively stable price relative to other assets. She singled out stablecoins that create two assets: one that maintains a fixed price and the other where the value fluctuates in order to help the first token’s price stay fixed. But, with reference to the latter type of stablecoin she added, “You might be getting into the land of security.” And then she said, “Folks like to put labels on things, but we’ll always look behind the label to see exactly what’s happening. We’ll give it the label it deserves under the law.”