Hester Peirce Unmasks SEC’s Secret Garden of Unaccountability

Commissioner Peirce unveils SEC’s “Secret Garden,” opaque internal guidelines that shape crypto regulation.

Hester Peirce the middle of flowers and one tulip is letting out a DEFI network.
Created by Kornelija Poderskytė from DailyCoin
  • Commissioner Peirce criticizes the SEC’s “secret garden” of regulation. 
  • Calls out the practice of issuing guidance outside formal rulemaking. 
  • Peirce urges for more public discussion and transparency. 

The Securities and Exchange Commission (SEC) has long set its sights on the crypto industry. The agency, tasked with protecting investors, sees major issues with many practices that have become ubiquitous in crypto. This includes initial coin offerings and staking, as well as statements that implicate most crypto projects in securities fraud.

However, the SEC’s approach to regulation has encountered significant criticism, especially due to the opaque nature of rulemaking. This includes critics from inside the agency, notably Commissioner Hester Peirce, a vocal advocate for the crypto industry. Her latest comments shed light on the SEC’s “secret garden” of crypto regulation that entangles crypto projects. 

Peirce Breaks Down SEC’s ‘Secret Garden’

On Tuesday, April 2, at the SEC Speaks event in Washington D.C., Commissioner Hester Peirce openly criticized the agency’s operational transparency and its approach to regulatory guidance. Her speech, titled “At the SEC: Nothing but Crickets,” not only revealed the SEC’s “secret garden” of unpublicized staff guidance.


The Commissioner claims that the guidance is not promulgated through a public process. Rather, it “appears in staff statements and speeches, phone calls, some types of no-action letters, and the like,” she claims. Moreover, some of it appears only in the “high-priced whispers of a select few attorneys or auditors.” 

Nobody can challenge these diktats because they are not final agency action, but compliance is mandatory for an entity wishing to avoid SEC delays, denials, and enforcement and examination scrutiny. So everybody silently complies.” 

According to Peirce, this clandestine approach to regulation has given rise to a particularly contentious piece of guidance that has significant implications for crypto companies.

SEC Demands Transparency From Crypto While Remaining in the Dark

Commissioner Hester Peirce’s critique of the SEC’s “secret garden” brought into sharp focus the particular issue of Staff Accounting Bulletin (SAB) 121. The directive mandates public companies safeguarding clients’ cryptocurrencies to include these assets and their corresponding liabilities on their balance sheets. 


She underscored that the bulletin was developed without the full Commission’s involvement or any significant public consultation. Moreover, she argues that the directive complicates financial reporting while potentially increasing the capital requirements for these firms.

This bulletin serves as an example of the SEC’s “secret garden” in action—a critical decision with broad implications for the market made in relative opacity. Peirce contends that such significant guidance should result from a more inclusive, transparent process involving the public and promoting innovation. 

On the Flipside

  • Critics in the cryptocurrency sector argue that SEC’s stringent rules hurt crypto innovation in the US< and push projects overseas. 
  • The SEC maintains that current regulations are sufficient for tackling crypto assets, most of which it considers securities.  

Why This Matters

The call for more transparent and participatory regulatory processes reflects a broader demand for clarity and transparency in crypto regulation. 

Read more about Coinbase’s criticism of the SEC: 
Coinbase CEO Calls for Gary Gensler’s Removal as SEC Chair

Read more about crypto venture firms investing in gaming: 
Future of Web3 Gaming? a16z to Invest $75M in Startups

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

David Marsanic

David Marsanic is a journalist for DailyCoin who covers the intersection of crypto, traditional finance, and government. He focuses on institutionalized crypto entities like major cryptocurrency exchanges and Solana, breaking down complex topics into easy-to-understand writing. David's prior experience as a business journalist at various crypto and traditional news sites has enabled him to maintain a critical approach to news while adhering to high journalistic integrity standards.