Over the weekend, the price of bitcoin dropped below the crucial $20,000 mark (which some notable traders expected) before resuming its upward trend. As the network prepares for a controversial update, Ethereum fell below $1,000 per ether for the first time since January 2021. Amid the recent crypto market crash, many crypto firms such as Coinbase and Blockfi are laying off their staff, citing financial and long-term strategic planning.
Hester Peirce, a commissioner for the US Securities and Exchange Commission (SEC) has spoken out against bailing out crypto companies, arguing that it’s really preferable to “let these things play out” in order to build a more sustainable business. She stated in an interview with Forbes on June 21 that, despite being painful, the recent crypto crash is sorting the strong companies from the weak. She remarked:
“When things are a bit harder in the market, you discover who’s actually building something that might last for a long, long time and what is going to pass away.”
The commissioner noted that she opposed bailouts for anyone involved in the crypto sector, especially those who failed to manage risk and overextended themselves. She remarked:
“Crypto does not have a bailout mechanism […] I don’t want to come in and say that we’re going to try to figure out a way to bail you out if we don’t have the authority to do it. But even if we did, I would not want to use that authority. We really need to let these things play out.”
According to Peirce, the current bear market also presents a chance for weak and poorly constructed projects to fall apart. Both market participants and authorities learn how the market operates in such circumstances during the crypto winter, as the crypto industry refers to the prolonged slump. She added:
“It is helpful for us to see the points of connection. It’s a moment, not only for market participants to learn, but it’s also for regulators to learn, so that we can have a better sense of how the market operates. “
The SEC commissioner’s remarks come as the crypto market is experiencing a wave of bankruptcies, layoffs, and hiring freezes. Peirce also addressed the entire regulation of cryptocurrencies, stressing her optimism towards this approach. She asserts that the market needs a “regulatory framework that delivers certainty.”
Read more:
- SEC’s Commissioner Hester Peirce calls for “trial and error” approach in stablecoin regulations
- SEC chair calls for stronger regulation to safeguard investors
