Tuesday, March 23, 2021

SEC Commissioner Hester Peirce advocates approval of a bitcoin ETF


Key facts:

The SEC should offer clearer regulatory rules on cryptocurrencies, says Peirce.

The commission spends a lot of time focused on the "illicit", said the official.

Hester Peirce, a member of the United States Securities and Exchange Commission (SEC), criticized the strict regulatory policies of that body around the approval of a bitcoin exchange-traded fund (ETF). The commissioner stressed that constantly adding more requirements to applicants for bitcoin ETFs "is unfair to innovators."

The commissioner, who participated in a virtual conference of the British Blockchain Association on March 15, stated in her presentation that regulators should promote clearer policies to make it easier for traditional financial institutions to “engage with cryptocurrencies with the confidence that they are complying with their regulatory obligations ”.

The area of cryptocurrency-based exchange-traded products (ETPs), which includes bitcoin ETFs, was a focal point of Peirce's speech at the conference.

While regulators must understand and analyze new asset classes and technologies, excessive conservatism can hamper competition, distort the market, and hurt investors. The SEC, for example, has been hesitant to give the green light to investment products that incorporate bitcoin, or other cryptocurrencies. […] Although we mean well, our caution regarding cryptocurrencies deprives investors of access to the products and services they want.

Hester Peirce, SEC Commissioner.

That overly cautious approach by the commission makes it difficult for it to change its stance in the face of successive ETP requests, Peirce said. "If we have said no to one proponent of a product, how can we say yes to another who seeks to offer a similar product?"

Peirce says that the bitcoin ETF is one of the most recurring topics in his recent interviews. The official says to date the SEC has refused to approve a bitcoin ETF, "although a growing list of proponents have requested approval."

It refers to their statements and votes saved after the disapproval of those requests.

Rather than applying the fairly straightforward standard that we have typically applied when approving other ETP submissions, including for precious metals like palladium and platinum, we have insisted on increasingly sophisticated analyzes of the relationship between the underlying bitcoin spot market and the market. futures, to determine the susceptibility of these markets to fraud and manipulation.

Hester Peirce, SEC Commissioner.

It is unclear, Peirce noted, whether previous applications for non-cryptocurrency ETPs could have been approved under this more rigorous approach.

He also asserted that the ever-changing application goals and requirements are unfair to innovators. "The reluctance of the SEC to allow traditional investment vehicles associated with bitcoin or bitcoin futures, has contributed to investors looking for more expensive, less convenient or less direct substitutes," said the official.

The "disproportionate focus on illicit uses" of cryptocurrencies that has characterized the SEC leads to an underestimation of their protective uses, the commissioner said.

Peirce, who is known as the "Crypto Mom" for her favorable positions towards cryptocurrencies, said in mid-February, in statements reviewed in CryptoNews, that the United States is ready for a bitcoin ETP and that investors are eager to have access to such a financial product. There are currently several bitcoin ETF applications before the SEC awaiting approval, including the one introduced in January by Van Eck, which was recently officially admitted by the SEC, as reported by this outlet.