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United States Securities and Exchange Commission Commissioner Hester Peirce has advocated for more decentralization in the U.S. financial system, along with a softer approach to crypto regulation and enforcement.

Peirce, also known as Crypto Mom, closed her fireside chat with CNBCs MacKenzie Sigalos at the ETHDenver conference on Feb. 29 by stating that decentralization benefits the U.S. financial system.

Centralization means that you have concentrated risks, she said before adding:

Peirce, a former lawyer, was appointed by former President Donald Trump to the SEC in 2018.She has been affectionately called Crypto Mom for her support of the industry and has often shown dissent against the over-regulation of digital assets.

Earlier in the talk, Peirce responded to questions about the proposed legislation that aims to treat decentralized technologies such as network nodes, validators, noncustodial wallets, mining pools and blockchain software as financial institutions.

It is troubling, said Peirce, who went on to say that there was still a lot of confusion over who has to register.

Sigalos also spoke about how the broker/dealer rule would redefine the classification of exchanges and could impact and encompass decentralized finance (DeFi), decentralized exchanges and developers, to which Peirce responded:

When you have people working together and someone interacting with code instead of with a person or entity, its a real challenge for the SEC to figure out what to do with that, she added.

She added that it wasnt even necessarily the SECs role to even get comfortable with crypto.

The SEC adopted rules on Feb. 6 that would require more market participants to register with it and comply with federal securities laws, bringing DeFi under greater oversight.

Related: Hester Peirce against gag rule, lawmakers challenging regulators

Peirce added that right now, the SEC is in enforcement only mode, but there need to be provisions to allow projects to grow and become decentralized without the threat of being sued.

The SEC commissioner also spoke about a wide range of crypto-related topics, including the agencys future following the U.S. presidential election later this year, spot Bitcoin (BTC)exchange-traded funds, and central bank digital currencies, coupled with the specter of state financial surveillance.

Magazine: Does SEC Chair Gary Gensler have the final say?

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SEC's Hester Peirce wants more decentralization in the financial system - Cointelegraph