SEC Commissioner implores the Agency to provide regulatory clarity for cryptocurrency

SEC commissioner Hester Peirce-the highest position in the agency second to the chairman-implored the Commission to provide regulatory clarity to the crypto industry.

Startups taking advantage of fundraising via tokens are exposed to the risks of securities laws, including the costly 'recision'-where a company is compelled to return all funds raised back to investors.

There is controversy that the company's XRP token may qualify as a security, which would pose legal costs on Ripple.

Currently, the potential threat of securities classification may be hampering Ripple's ability to push adoption of XRP. Instead, Peirce stated that it is the Commission's duty as a regulator to provide the public with clear guidance as to how organizations can comply with U.S. securities laws.

The basis for current U.S. securities laws stems from the Securities Act of 1933 and the Securities Exchange Act of 1934.

To effectively navigate these rules it is necessary for a company to hire the services of a seasoned securities lawyer, which costs a startup hundreds of dollars per hour, and still does not necessarily protect a company from enforcement actions.

"Without a functional secondary market, which encompasses broker-dealers and trading platforms that can legally trade digital securities, and advisers and funds that can buy and hold the assets, the primary market in the U.S. will wither and retail investors will not enjoy the protection our securities laws offer."

In the primary capital market, investors purchase a security directly from the issuing company, instead of repurchasing the asset on the secondary market from an investor.

Crypto-enthusiasts will be exposed to unscrupulous companies incorporated loosely regulated jurisdictions instead of U.S. securities laws, which are considered the global standard.

"We should not be trying to guide innovation, but we also should recognize that we cannot stop it and embrace the potential for positive change that innovation offers. Our silence is likely to simply push this innovation and any attendant economic growth into other jurisdictions that have done their work and provided clear guidelines for the market participants to follow. The U.S. securities markets have historically been the envy of the world; I do not want heel-dragging by the SEC in crypto to mar that well-deserved reputation."