SEC Commissioner Hester Peirce says most crypto assets are not securities

Crypto Task Force leader Hester Peirce highlighted in a speech on Monday how the Securities & Exchange Commission (SEC) defines various crypto assets under securities laws.

Commissioner Hester Peirce outlines potential SEC crypto regulations

At the SEC Speaks event on Monday, Crypto Task Force leader Hester Peirce spoke on the need to provide clarity for the crypto industry. Peirce highlighted steps that the Commission has taken to clarify the place of digital assets, including holding over 100 meetings with crypto industry leaders and issuing guides on certain crypto regulations.

However, she stated that an important subject of discussion among industry leaders is whether crypto assets are regarded as securities. Peirce responded that most of the currently available crypto assets do not fall under that category.

She also expressed that "economic realities matter" when dealing with non-securities crypto assets.

Peirce reiterated the Task Force's conviction against adding meme coins as securities. She added that a cryptocurrency had to possess economic rights in a business or other entity to be called a security.

"Crypto assets that do not represent economic rights or an interest in a business entity or other promisor […] and are solely for use or consumption should not be subject to the federal securities laws," Peirce stated.

The Crypto Task Force also seeks to establish clear rules for crypto transactions to prevent actions such as rug pulls. She also stated that the Commission could consider introducing a registration framework for securities offerings involving crypto assets and implementing a carefully conditioned "safe harbor" that would permit certain transactions.

This typically includes allowing those potentially classified as investment contracts to function without full securities registration, provided they meet specified regulatory criteria.

She added that the Commission could include an extra framework that would exclude activities such as crypto airdrops from requiring securities registration.

"The Commission might establish an exemption framework so that certain distributions of crypto assets as part of an 'airdrop' are not deemed 'offers' or 'sales' subject to registration," Peirce stated.

Additionally, Peirce emphasized the need to provide regulatory clarity on when the connection between an investment contract and a crypto asset is severed. She noted that some courts have deemed secondary sales of crypto assets to be securities transactions. Peirce suggests that the Commission should not leave such determinations solely to the courts' judgments.