Ric Edelman: I’m assuming that you were like all of the rest of us, surprised at what happened to FTX.
Hester Peirce: I think everyone was surprised. A lot of facts and circumstances remain uncertain.
Ric Edelman: We all know that crypto is a very risky asset class, but I’m not so sure that many people regarded that the place they’re buying their crypto from was also risky. What’s the takeaway that you would like to share with consumers?
Hester Peirce: I think that’s a really important perspective because events like this are a reminder to people that you need to think about the full panoply of risks associated with assets. That includes the risk of the asset itself, and where and how you’re going to hold that asset. Or are you going to hold it yourself, which you can do with crypto, or are you going to rely on someone else to hold that for you? And if so, what is it that they’re allowed to do with that asset? And what are your safeguards if something goes wrong?
One of my criticisms of my own agency is that we haven’t provided the clarity that would help people understand how entities are regulated at the federal level in the United States. I think that kind of clarity could be very helpful to investors.
Ric Edelman: Do you think this incident is going to create a new sense of urgency in Washington to get regulations in place?
Hester Peirce: Certainly, we’re all concerned that people suffer as a result of events like this, and I hope we can pull from that a silver lining in the sense that it may motivate those of us in Washington to really get to work. We have to keep bringing enforcement actions, but the piece that’s been missing thus far has been designing a regulatory framework. I’m hoping these events can be a catalyst for us to get to work, with much needed input from Congress.
Ric Edelman: How long before we see those regulations?
Hester Peirce: When the SEC does not take advantage of its tools to be a proactive, productive regulator, Congress pushes it along. A lot is in flux now, and we’ll see.
Ric Edelman: Lastly, what’s your advice for the everyday consumer who has watched these events unfold?
Hester Peirce: Think about your circumstances which are unique to you and you know better than anyone else. Don’t be embarrassed to ask questions, and don’t ever fall for FOMO – the fear of missing out. There will be other opportunities. You don’t need to act now. When people tell you that you must invest right now, wait until you’re ready, until you feel you have your questions answered and you’re comfortable. And if that point doesn’t ever happen, then you don’t have to buy any particular asset class. It’s your decision.