SEC Commissioner Hester Peirce reflects on her time at the agency, what she still wanted to get done: 'There’s no good time to leave'

After nearly a decade at the U.S. Securities and Exchange Commission, where she emerged as a key voice on digital asset regulation across multiple presidential administrations, Hester Peirce is wrapping up her last week at the agency. 

Peirce, who has been an advocate for the cryptocurrency industry, pushed for rules as a Republican commissioner while SEC Chair Jay Clayton, Gary Gensler, and now Paul Atkins have led the agency. During her time, she pushed for more clarity, criticized the SEC's approach when it brought charges against key players for not properly registering, and later created a crypto task force while welcoming SEC staff statements clarifying its rules around staking.

Peirce's statements usually include an anecdote and some sense of humor with a touch of understatement — which contrasts with her outspoken views on regulation. For example, titles for her speeches over the years included — "Peanut Butter & Watermelon: Financial Privacy in the Digital Age" or "Headstands and Summervaults: A Statement on Crypto Vaults and Lending Strategies."

On Friday, Peirce posted a letter on X that she sent to President Donald Trump, resigning from the commission. Her leave comes as progress on the first-of-its-kind comprehensive crypto legislation has stalled in the Senate and is unlikely to become law. The SEC has, in response, moved full steam ahead. The agency has since released its long-awaited innovation exemption, and that comes after the SEC released "Regulation Crypto Assets" and earlier guidance on how federal securities laws apply to digital assets and transactions.

Peirce is headed to Regent University School of Law, where she will teach securities law and writing. Before leaving, Peirce spoke with The Block last week about her work over the years, regrets, financial surveillance, the role of intermediaries, developer protections…  and how her future may not include baking sourdough bread.

The Q&A below has been edited for clarity and condensed for length.

Q: Your last day is October 2 — generally, how are you feeling after putting in your resignation?

"Well, I sent the letter earlier this week, so I've had some time to think about it. It's a wonderful part of American government that people in government come and go, and that someone new will be sitting in this seat. And so I'm excited for that new person to come in, and I'm excited to see what the commission does after I leave."

Q: You have been a commissioner at the SEC through both President Biden and Trump administrations. What has been your biggest takeaway for crypto regulation, given the different approaches each administration took to it?

"I still think it's a shame that we didn't start earlier trying to put good crypto regulatory policy in place because I think the industry in the United States lost a lot of ground fighting, in my view, unnecessary regulatory and enforcement-type battles, when all that energy from both the regulators and the industry could have been put into building a good regulatory framework that would have been more protective of investors and would have been more protective of developers trying to just build good things in the United States. That would have created a worse environment for bad actors trying to do bad things or people just trying to do nothing but doing it in the name of crypto. So I think, woulda, coulda, shoulda, right? You can't go back, but I think that is a good lesson for regulators as they think about regulating technology and new innovation in general — that the consequences of getting it wrong for a long time can be really long-lasting, and a lot of people can get hurt. And so, I hope that in the future, technology regulation will be done better." 

Q: Given your time at the SEC, what do you feel like has been the most important change in crypto regulation that you believe the SEC and yourself have made during your tenure?

"Well, I think the big change has been that for the last almost two years now there has been a new approach, which is to say we are going to try to get the regulations in place. [It's been a] proactive focus on working with people to think about what sensible regulations would look like, and we've started to make progress on that. There's been a lot of work here at the SEC over the last couple of years of trying to get to a better place."

Q: Is there anything you wanted to get done that you weren't able to, or do you have any regrets?

"Lots — you asked how I was feeling about leaving, and I'm looking at the work that's on my plate, the work that I'm hoping to get done in the next week, and then the work that will spill over beyond that. There's a realization that there's no good time to leave. There's always going to be more work to do. There's always going to be things that you wish you could be part of that you won't be able to be part of because you're leaving. There's a lot of work still to be done. We've put out Reg Crypto — we're getting comments on that."

"We put out transfer agent rules. Finalizing those will be very important. We've got a lot of work to do on investment advisor and investment company custody. We just put out the innovation exemption, and so that's a five-year, time-limited exemption. The goal is really to get working, right away, on a permanent rule set, and that will be a very exciting area to work in."

"So there, there are a lot of things that we still need to do in crypto and non-crypto. So yes, there are many things I would have liked to do. I would have liked to start a compliance officer advisory committee as well, which again, it's not that's not a crypto thing, that's a more general thing. But that's something that I've long thought would be beneficial to the SEC."

Q: Is there anything specific to crypto that you wanted to get done before heading out?

"There is a fundamental issue that we across the government really need to address, and that is we need to make sure that developers feel protected so that they can do their work without feeling that if someone uses a tool that they build to do bad things — that they'll be on the hook for those bad things, right? Developer protection is really important because bright minds will only spend their time working on problems, on solving societal problems, if they know that when they come up with a good tool that lots of people want to use, they're not going to be held responsible for the bad things people do. Obviously, if they're participating in the bad conduct, that's a different story, but if they're really just building a tool that someone uses to do a bad thing, they need to be protected."

"Another area that I think we really need to work on, and it intersects with crypto, is — we need to look at our financial surveillance practices and how we've been using financial surveillance. In the United States, we rely heavily on financial surveillance to identify crimes like money laundering and those types of crimes, but we also use it to identify criminal activity more generally, and so it's become a huge part of the way we go about trying to identify criminal activity and pursue it.

"In light of new technologies, including technologies coming out of the crypto world, we need to be thinking about how we can do that better and more efficiently and more effectively, and in a way that's more protective of Americans' privacy. So I've been quite critical about a financial surveillance regime that sort of assumes that nobody should have privacy in their financial lives, and I'd like us to get back to a place where we really prize individual privacy, and we expect people to be protected, to not have to share their financial data with everyone and their personal data with everyone."

"And so, I think that a real effort at this time would be terrific, and I'm sorry that I won't be around to be part of that — getting us to a better place where we really are protecting Americans' privacy and their ability to live their lives without being monitored, but also are making sure that we are giving law enforcement effective tools to do their jobs as well."

Q: Do you have any advice for the SEC as it moves forward?

"I think just keep seeking public input. We are very much of the view that we don't have all the answers here, that we need to be working with a whole range of people on the outside, not just people who are in the crypto industry, but people who are critical of the crypto industry as well. We want to hear from everyone, and I think that's the best way to get to a good set of rules, so I'd say just keep up the good work."

Q: What is something that you think the crypto industry should absolutely not get from the SEC?

"That's a good question. The technology allows you to do some pretty remarkable things — one of which is to completely take intermediaries out of transactions, so that I can just engage in a transaction with a smart contract that's out there and available. It's a peer-to-protocol transaction. Nobody's really on the other side of that. So it is very important for us to think differently about transactions that involve intermediaries and those that don't."

"The reality is that many financial transactions will continue to involve intermediaries, and they should be regulated in the same way that we regulate existing intermediaries … if you have an intermediary, that intermediary can steal your money, be careless with your money, or get hacked by someone else who steals your money, and so that's why we have regulation. What I don't think is right is when people say — there's no intermediary here; look somewhere else because we don't have intermediaries here. Really, if there is an intermediary, we all need to be honest about that, and we all need to think about regulation with that in mind. So, to the extent people are trying to say they are truly decentralized when they're not, I think that's something that we have to be very careful to push back on."

"And then another thing that I would say is, and I'm not saying that this is what everyone is asking for, but I think we really need to be upfront with people. I'm a big believer in people having self-sovereignty, the ability to hold their own crypto, the ability to trade in ways that don't involve intermediaries, those kinds of things. But if something goes wrong, then there's a consequence of you taking that responsibility on yourself."

"And again, I'm a person who believes that people have the right to make their own choices, but they should understand too that there are risks they're taking. You know, leverage can be nice on the upside, and it can be very painful on the downside. And so, I would just say education, and don't expect the government to protect you when you have opted out of a government protective regime."

Q: The Clarity Act has stalled in the Senate and doesn't really seem likely to pass this year. How should the SEC move forward in its rulemaking agenda without it? And are there any concerns that, as the SEC is moving forward with its rulemaking agenda, about potential court reversals or the sort of permanency behind the SEC's plans? 

"I'm still hopeful that Clarity could get passed. That is a big piece of legislation that involves a lot of effort by a lot of people over time, and so I think there's still work being done to try to move that forward. But we have authority that we can use already, and we have been using that already, and I think that's our responsibility to continue to use that authority to adopt rules."

"I always say the same thing about durability. If you want the rules to be durable, and we're building rules within which people can actually do things and build things, then use that rule, use that regulatory framework to do and build good things that other people want, because if people are using the products and services that come out of that  — if it's clear that people are enjoying those technologies, then the rules that made them, within which those technologies grew up, are more likely to last as well. It's harder to take them away."

Q: Is there a concern that if Congress doesn't pass comprehensive crypto legislation, the framework that the SEC is building is sufficient on its own or are there fundamental gaps?

"We have a lot of authority to do things, and I don't know that I would say there are fundamental gaps. I think if people want a comprehensive spot market regulatory framework, the CFTC [Commodity Futures Trading Commission] can do some on that front. I think mostly what I'm trying to focus on is just getting us to use the authority we have to do what we can do, and I think that's really the way forward until legislation comes along."

Q: You're going in November to Regent University as an associate professor. What are you most looking forward to over there?

"Working with a generation of law students that is facing a world that's very different than the one that I faced when I graduated from law school, and just helping them to think about their futures and prepare for their futures. It's a real honor to be able to interact with and work with students. They're always more optimistic and energetic than the rest of us. So I hope some of that rubs off."

Q: What's something that you're looking to bring from your time at the SEC that you think will make its way into the classroom?

"I've seen that the people who really are most successful out there from a career standpoint are very intellectually curious, and so I hope to encourage my students to be that. I don't think that you need to want to be a securities lawyer to take some securities regulatory classes… one of the ways that we see people get in trouble from an enforcement perspective at the SEC is when they're really doing something and they're not really thinking that this could have securities law implications. Securities laws are pretty broad, and so just even giving people the tools so that they can say … 'hey, this could actually implicate the securities laws. Maybe we need to do some more thinking about this.' I think that skill can also be applied then to other things, right — helping students to really spot issues more generally."

Q: You've been really busy at the SEC for a long time now, what sort of things are you looking to do now with potential extra time, even though being a professor as well will be busy?

"Well, I am trying to move to Virginia Beach. I'm working on that right now, and so I don't know. I mean, it's a new area for me. I'm excited to discover it.  The first years of teaching, everyone I've talked to has told me that they're quite intense, so I expect to be quite intensely involved. I like to bake when I'm not working, so I expect I'll be doing some of that as well."

Q: What kind of baking?

"I like everything from cookies to cakes to bread. I just like to try different things."

Q: Have you tried making sourdough bread yet?

"I have. I had an experience where I had a container of the starter in the fridge. This was a long time ago when I was in law school; actually, I had roommates. We had a very small refrigerator. The starter was in there. It popped the top overnight, and it went all over everything in the fridge, and I had a roommate who was pretty mad at me. So that's what I always think about when I think about sourdough bread."

Q: Anything else you'd like to share as we wrap?

"The work of the agency goes on. One commissioner's departure doesn't really matter. So I think it's, in some ways, kind of a non-event."