SEC Commissioner Warns of ’Floor Is Lava’ Crypto Regulation

SEC Commissioner Hester Peirce likened U.S. crypto regulation to navigating a darkened room in a game of ’the floor is lava,’ where firms must leap blindly between legal safe zones. Speaking at an SEC roundtable, she criticized the lack of clear rules that force market participants into precarious compliance maneuvers.

Peirce’s analogy underscores the regulatory uncertainty stifling innovation in digital assets. The absence of structured guidance erodes trust, pushing firms to avoid direct engagement with crypto markets altogether.

Fellow commissioner Mark Uyeda proposed expanding custody options through state-chartered trusts—a potential lifeline for institutional adoption. The debate highlights the growing tension between regulatory caution and the crypto industry’s demand for workable frameworks.