Despite her bullish defense of the growth of the crypto industry, Securities and Exchange Commission (SEC) Commissioner Hester Peirce, also known as “Crypto Mom”, would never support getting it out of a crisis. On Friday, she claimed that the lack of such a mechanism is actually a market strength.

Let bad companies fail

In an interview with Forbes, Peirce clarified that the SEC does not have the authority to be a “systemic risk regulator,” tasked with determining which institutions require government backing. However, even if he were, he would not support such measures for the flood of crypto platforms facing trouble today, especially if they were irresponsibly over-leveraged.

“I don’t want to come in and say we’re going to try to find a way to bail you out,” he said. “But even if we did, I wouldn’t want to use that authority, we really need to let these things play out.”

With cryptocurrency prices returning to late-2020 levels, a number of over-leveraged lending platforms and venture capital firms are desperately seeking liquidity to stay afloat. Companies like Celsius and Babel Finance, for example, have been forced to disable user withdrawals due to market pullbacks and financial contagion.

BlockFi has also now accepted a $250 million loan from FTX, while venture capital firm Three Arrow Capital is considering similar options.

As a member of the SEC, Peirce is paying attention to those companies that collapse under such stressful conditions, so they can “see how the market works.” She believes the commission is more likely to receive advice to handle these circumstances during the bear market.

Peirce disagreed with chairman Gary Gensler on a number of issues, one of which is the delay in the approval of a Bitcoin spot ETF. However, when it comes to cryptocurrency lenders, she is just as skeptical as he is about some of her overly-promising returns.

“When you have an attractive return, should you ask yourself questions about the associated risks?” she said. “And if you don’t get answers, you need to think about whether you want to make that investment.”

The Lummis-Gillibrand Bill

Crypto mom showed cautious optimism about the Senate odd couple Lummis and Gillibrand’s landmark crypto legislation introduced earlier this month. For her, the only thing that matters is that it provides regulatory clarity, although not in the exact framework that she is looking for.

The legislation would tilt the jurisdiction of the two largest cryptocurrencies towards the Commodities and Futures Trading Commission, rather than the SEC. Alone, Bitcoin and Ether comprise more than half of the total digital asset market capitalization.

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