"Crypto Mom" Hester Peirce Departs, SEC Regulation Enters Two-Person Era

Original ｜Odaily Planet Daily

Author ｜jk

On October 2, local time in the U.S., "Crypto Mom" Hester Peirce left the U.S. SEC, officially resigning from her position as a commissioner. She will next teach at Regent University School of Law, while the SEC, now left with only Chairman Paul Atkins and Commissioner Mark Uyeda, both Republicans, officially enters the "two-person era."

Looking back over the past eight years, it was less a term of office than a long debate: Peirce, starting from a minority position, became a lonely supporter of the crypto industry, gradually shaping her views into the embryonic rules of today’s crypto industry.

Before 2022: A Solo Dissent

Peirce was sworn in on January 11, 2018. Prior to that, she served as a senior legal advisor to the Senate Banking Committee and was a senior researcher at the Mercatus Center at George Mason University.

SEC.gov | Hester M. Peirce

Photo of Hester Peirce on the SEC website, source: SEC

On July 26 of that year, the SEC again rejected the Winklevoss brothers' Bitcoin ETF application. Peirce immediately issued a dissenting statement, arguing that the relevant rule changes complied with the Securities Exchange Act of 1934 and should be approved by precedent. The crypto community remembered this dissent and bestowed upon her the nickname "Crypto Mom."

In 2020, she proposed a plan giving developers three years to build functional or decentralized networks without immediately applying full securities registration requirements. On April 13, 2021, she released Safe Harbor 2.0, which added requirements for semi-annual disclosure updates and exit reports. This proposal ultimately did not receive committee approval. However, it did not disappear; corporate lawyers referenced it repeatedly as a framework for designing token issuance structures.

After 2021, with Gary Gensler as chairman, the SEC did not introduce rules regarding token issuance, DeFi protocols, or crypto exchange registration but instead advanced through enforcement actions. Peirce referred to this approach as "regulation by enforcement," a similar criticism that dates back to 2020.

Reports indicate that she dissented in the 2021 DeFi Money Market settlement, arguing that some of the projects being pursued were failed experiments rather than fraud. When the SEC sued companies like Coinbase, Kraken, Nexo, and Ripple, she publicly questioned whether it was worth investing resources in these lawsuits and expressed concern that it would detract from other institutional work and set a bad precedent.

A retrospective article from The Defiant noted that between 2022 and 2023, she was the only commissioner with voting rights who supported crypto, and compliant lawyers could only rely on her dissent to substitute for official guidance.

2024: Late Approval

The Bitcoin ETF was another main thread throughout her term. She criticized in speeches that the SEC had refused constructive communication with crypto users and developers for four consecutive years and had set specific hurdles for crypto assets in the ETF approval process.

In 2024, the Bitcoin spot ETF was finally approved. However, in her dissenting opinion at the time, she targeted the prolonged delays: she believed the SEC wasted a decade, damaging public trust, consuming employee resources, blurring the agency's role, and alienating a generation of product innovators from the SEC. The industry believes her early dissent paved the way for this approval and the SEC's softening stance on meme coins and developer activities in 2025. It is easy to understand why many wish to remember her this way.

SEC Commissioner Hester Peirce Advocates Privacy Tech

Hester Peirce at the Bitcoin conference

That same year, with a change in the White House, the upper channels of the crypto industry were opened, and the SEC welcomed a new leader.

2025: From Minority to Leader

On January 21, acting chairman Mark Uyeda announced the establishment of a crypto working group and appointed Peirce as its head.

At the time of the working group's establishment, the SEC's statement candidly acknowledged that it had previously relied mainly on enforcement to passively regulate crypto and that it "could do better" in providing viable options for those seeking registration.

U.S. SEC's steadiest crypto advocate, Hester Peirce, to depart next week

Photo of Hester Peirce at the meeting

The working group subsequently listed ten key areas, including defining securities attributes and custody solutions, held public roundtable meetings, revoked previous bank custody guidelines, and supplemented industry professionals to provide opinions on tokenization and exchange rules. She described herself as a "maximalist of freedom" and stated that many meme coins "are likely not under the SEC's jurisdiction," suggesting that Congress and the CFTC handle this issue.

During her tenure as head of the crypto working group, the SEC's enforcement stance towards the crypto industry underwent a noticeable shift. In February 2025, the SEC first jointly applied with Binance to suspend litigation, then agreed to withdraw the lawsuit against Coinbase, and on February 27 submitted a motion to dismiss with prejudice. On March 3, the SEC also agreed to withdraw the lawsuit against Kraken, which stated that this outcome did not involve an admission of wrongdoing, fines, or business adjustments. On May 29, the SEC jointly applied with Binance to withdraw the lawsuit, also with prejudice.

According to Bloomberg, by early March, the SEC had withdrawn or suspended at least nine cases against crypto companies. The Consensys case was also dismissed, and Robinhood Crypto announced that the SEC had concluded its investigation into it. The dismissal documents for the Coinbase and Binance cases cited the ongoing work of the crypto working group as a reason. Although the dismissals were the SEC's overall decision and not solely Peirce's achievement, the resolution of these cases not only bore her influence but also marked the complete retreat of the "regulation by enforcement" approach she had criticized for years.

What She Leaves Behind and What Remains Unfinished

Years of advocacy are now turning into documents. The outside world generally believes that her original safe harbor ideas can now be seen in the SEC's proposals, exemptions, and guidelines. However, much of this work is still in progress:

Regulation Crypto Assets: On August 18, the SEC proposed this rule, which includes a one-time maximum "startup exemption" of $5 million (over four years) and a maximum "financing exemption" of $75 million every 12 months, allowing crypto assets to no longer be regarded as "investment contracts." The proposal will also take precedence over state registration and qualification requirements, with public comments due by October 20. This is the SEC's first announcement of a specialized rule-making process for crypto, proposed in writing by Atkins, Peirce, and Uyeda, with no opposition. Peirce stated in her announcement that these exemptions and safe harbors cannot fit all models and are just a step on the long road to a clear, reasonable, and enforceable regulatory framework.

Custody Rules: On October 1, the SEC released a custody proposal allowing investment advisors and regulated funds to hold crypto assets themselves under certain circumstances and to use state trust companies as custodians, provided they meet certain conditions.

Modernization of Transfer Agent Rules: This proposal, introduced on September 1, represents the first substantive revision of transfer agent rules in over 40 years. It allows transfer agents to use blockchain or other distributed ledgers as the primary record of securities holders or as part of it, but does not mandate usage. Transfer agents using blockchain or processing tokenized securities must maintain wallet addresses in their holdings records. However, the proposal does not determine whether a particular crypto asset is a security.

Innovation Exemption: On September 17, the SEC issued this temporary, conditional exemption allowing qualified tokenized securities venues to use automated market makers and liquidity pools to trade tokenized NMS stocks. The exemption period is five years, expiring on September 17, 2031, and the SEC can shorten, extend, or adjust it at any time, positioned as a "sandbox" for future rule-making reference. The first tier of stocks (such as S&P 500 and Russell 1000 components) is limited to 75 securities, with trading volume not exceeding 0.25% of the previous month's average, while the second tier is limited to 250 securities, 2.5%, and only for secondary market trading. The SEC is also soliciting public comments on this exemption.

Variables in the Two-Person Era

Hester Peirce's second term expired in June 2025, and she could continue to serve for about 18 months according to regulations, meaning she left about two months before the term ended.

The remaining SEC has only two commissioners. A rule passed in 1995 allows the commission to continue operating with fewer than three commissioners, but with two people, if a disagreement or recusal occurs, matters will come to a standstill. The White House has yet to nominate a successor, and there is no conclusion on the successor to the crypto working group. At the congressional level, the CLARITY Act remains stalled in the Senate, and the industry lacks a comprehensive legislative framework delineating SEC and CFTC regulatory authority. In the absence of legislative progress, Regulation Crypto Assets has temporarily become the main vehicle for providing regulatory clarity. Some industry executives worry that rules lacking legal support may be altered by future administrations.

Conclusion

Eight years ago, when Hester Peirce walked into the SEC, crypto was still like a sea without a beacon. She brought only a kind of untimely stubbornness: when everyone stood against the crypto industry, she still questioned what good rules should look like. Thus, a dissent became a stone, a safe harbor became a sketch, and a long-standing minority position became a reference point that later generations could repeatedly cite.

"Crypto Mom" left behind not a completed building in the field of industry regulations, but a drawn blueprint, a few newly erected scaffolds, and a small path that she walked step by step. The road has yet to be named, the rules have not been fully finalized, the successor has not yet appeared, but the crypto waters are no longer as quiet as they were eight years ago.

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