Crypto Mom Fights Back

US Securities and Exchange Commission (SEC) Commissioner Hester Pierce, often referred to as “Crypto Mom,” has expressed her apprehension about the SEC’s recent advice to accounting firms to abstain from non-audit work for cryptocurrency businesses.

On July 28, Pierce posted a tweet contradicting the SEC’s Chief Accountant Paul Munter’s proposal that accounting firms should take a black-and-white approach when dealing with crypto companies. Pierce fears that such a stance may deter these firms from willingly aiming for transparency.

While Pierce emphasized that crypto businesses and their accountants should make it clear what is considered as proof of reserves, she questioned the cautionary advice against accounting firms conducting assurance work for cryptocurrency businesses. She posed the question in a tweet, “Why would we want to discourage good-faith efforts to provide more transparency?”

Munter, on the other hand, voiced concerns that partial engagements might lead to selective disclosure by crypto firms to accounting firms, who might then portray this information as a comprehensive audit to their clients.

He suggested that any work outside the boundaries of a complete audit would lack transparency for investors. Munter explained that some crypto asset trading platforms, along with others in the crypto industry, have marketed third-party reviews of certain business aspects, often masquerading as an “audit.”

Munter advised that if an accounting firm finds a client misrepresenting non-audit work publicly, it should contemplate a “noisy withdrawal.” This could involve distancing itself from the client through a public statement or reporting the crypto firm to the SEC.