Former President Donald Trump recently hinted that he might nominate individuals for the position of SEC chair if he wins the upcoming election in November. He pledged that on his first day in office, he would fire current SEC Chair Gary Gensler.

In an interview with David Lin, Commissioner of the U.S. Securities and Exchange Commission, Hester Peirce, discussed potential changes to current regulations expected in 2025. She said  that the SEC has been primarily relying on enforcement as its main regulatory approach, which she believes is not the correct way to design a regulatory system.

While enforcement is important, it shouldn’t be the primary tool for a regulatory agency. Unless there is a shift in this strategy, she doesn’t foresee any positive movement ahead. Peirce explained that while there have been many invitations for individuals and companies to register with the SEC, the lack of real success stories makes it unlikely that they will engage. This disengagement is detrimental to everyone involved. 

Understanding Hester Peirce’s Approach:

She said that meaningful reforms could occur immediately, regardless of who is in charge. The focus should be on identifying issues within the SEC’s regulatory jurisdiction and developing effective solutions. The commissioner said that markets often find their own solutions, suggesting regulators should remain open to these market-driven approaches.

The commissioner also explained the importance of creating regulations that weigh both costs and benefits, along with regularly assessing their effectiveness. If rules aren’t working as intended, they need to be revisited.

Additionally, she expressed concern over the SEC’s recent attempts to expand its jurisdiction through enforcement actions, stressing the necessity of adhering to the boundaries set by Congress to ensure sound agency governance.

Amid the SEC’s ongoing conflict with crypto companies, Gensler has faced significant criticism. Many industry leaders and experts are advocating for a change in leadership, with Ripple CEO Brad Garlinghouse making strong statements regarding Gensler’s tenure.