The Mother: Opening Remarks For Trading Roundtable, SEC Commissioner Hester M. Peirce, Washington D.C., April 11, 2025

Welcome to everyone watching in person or online to the second in a series of roundtables dedicated to discussing regulatory challenges and opportunities in the crypto asset market. I would like to thank all the staff who are making these roundtables possible. Thanks also to the folks who have submitted responses to our requests for information and to the folks who have come in to meet with the Crypto Task Force. These materials and discussions have been informative, and I hope you all will continue to engage with us. I found the first roundtable useful in shaping my thoughts on when crypto assets implicate the securities laws. Given the expert panelists who have graciously agreed to participate today, I am confident that this discussion will be just as informative and engaging as the first.

Our panelists represent a variety of institutions, including national securities exchanges, other trading venues, and crypto-native firms that engage in or facilitate various types of centralized and decentralized trading activities. The different perspectives will contribute to an interesting conversation but also highlight an important feature of successful markets: the ability to pursue a wide range of business models and approaches to trading. This flexibility fosters innovation, increases competition, and ultimately benefits investors. We should keep this in mind as we consider an appropriate regulatory framework for crypto asset markets.

Notwithstanding the diverse range of approaches to trading, I expect that many common issues will emerge. For example, firms are interested in offering investors the ability to engage in pairs trading – or the trading of a security against a crypto asset, such as a stablecoin. SEC rules do not prohibit this activity. Given that securities historically have been quoted and settled in US dollars, however, certain of our rules, such as recordkeeping, reporting, and national market system rules, may not clearly contemplate pairs trading. Would it be helpful for us to provide guidance about how any of our rules apply to pairs trading or whether any rules should be modified to better accommodate or account for this activity?

A related set of issues that I hope you’ll consider are authority and jurisdictional issues. As a general matter, the SEC’s authority is limited to securities activity. What can and should we do in the short-term and what should Congress consider in the longer-term to ensure there are no regulatory gaps, as firms increasingly seek to combine securities and non-securities trading activity? In addition, because the SEC is just one of many federal and state regulators that currently and in the future may play a role in crypto regulation, what concerns do you have about potential overlapping or conflicting regulatory regimes?

In the near term, how useful would it be for the Commission, using its exemptive authorities, to permit limited scale market testing by intermediaries? What would appropriate guardrails be? Participating firms could see what works and does not technically and commercially, and such trials also could inform the Commission’s rulemaking efforts.

Finally, as daunting as the task before us is, the Commission has experience adapting a regulatory framework to new and innovative technologies and methods of trading. In 1984, for example, the Commission issued a release expressing its views on “computer brokerage systems,” that allowed investors to send orders to brokers without the use of a telephone.[1] In 1998, the Commission issued a statement regarding the use of the internet to offer securities services.[2] Regulation ATS was a response to the development of new types of trading systems made possible by advancements in technology.[3] What lessons can these and other examples of integrating new technology into our markets teach us?

Our moderator, Nick Losurdo, and I are both fans of apple cider vinegar. ACV, as we believers call it, is supposed to be good for whatever ails you.[4] People clamor especially for ACV with “the mother,” which is the bacterial bundle that gives ACV its probiotic punch. A close look at the tangled mass might scare you, but ingesting it is good. So too the topics before our panel: we are looking at an unsightly legal and technical knot of issues, but the conversation—among our expert panel—will be good for us.