US Securities and Exchange Commission (SEC), Center Commissioner Hester Pearce listens during a House Financial Services Committee hearing on Tuesday, September 24, 2019 in Washington, DC, US.
Andrew Harrer | Acesparks | Getty Images
Hester Pierce is shocked.
For years, the Securities and Exchange Commission, of which Peirce is a member, has denied applications by the country’s exchanges and financial firms to list securities that track the performance of the popular digital currency bitcoin.
Before — say, 10 years ago — concerns about potential market manipulation and liquidity could have been understandable, but things have changed.
“This is probably the biggest, most frequently asked question I get: When will the SEC approve a bitcoin exchange-traded product?” Commissioner Pierce said in an interview with Acesparks on Thursday.
“I thought that if we had applied our standards as we applied them to other products, we would have already approved one or more of them,” she said. “With each passing day, the argument we have used in the past to not approve is getting weaker.”
The SEC applies a “unique, advanced standard” for filings related to digital assets, it wrote in 2020. And it has argued that the agency is asking exchanges and ETF sponsors for a traditional, equity-based one for assurance. Product.
“People with a regulatory mindset, when they encounter something new like this, say, ‘Oh, wait a minute: the market for bitcoin looks a little different than those markets,’” Pearce said Thursday.
Now, she said, the bitcoin market looks like an established market with greater participation from institutional and mainstream retail investors.
“So, I think the markets have matured quite a bit,” Pearce said.
Renewed call for an SEC-approved bitcoin ETF after the regulator said it would again delay its decision on whether to approve an application by VanEck to list its bitcoin trust shares on the BTZ exchange of the Chicago Board of Exchange. To be given
Regulators said in a letter dated June 16 that they would take additional time to seek comments from the public. In a special way, The SEC is asking investors and academics For his opinion on whether bitcoin ETFs can be vulnerable to manipulation, or whether bitcoin itself is sufficiently spread out and therefore resistant to similar covert tampering.
But Peirce, a Republican appointed by former President Donald Trump as one of five SEC commissioners, has long condemned what he sees as a double standard in his own agency when it comes to bitcoin products.
perhaps his sharpest objection came into disagreement of 2018, when it argued that the SEC should have approved an application filed by the Chicago Board of Exchange’s BTZ Exchange to list and trade shares of the Winklevoss Bitcoin Trust.
“By holding off approval of cryptocurrency-based ETPs for the foreseeable future, the Commission is engaging in qualification regulation,” she wrote at the time. “Bitcoin is a new phenomenon, and its long-term viability is uncertain. It may succeed; it may fail. The commission, however, does well to assess the likelihood of any outcome for bitcoin or any other asset. Not deployed.”
three years later, the present VanEck Filing – similar to pending bitcoin ETF applications from Fidelity, Kathy Wood’s Arch Invest and many others – is seen by the industry as an SEC’s litmus test now conducted by a cryptocurrency expert, Chairman Gary Gensler.
Gary Gensler, former chairman of the Commodity Futures Trading Commission, testifies at a hearing of the US Senate Banking Committee on Systemic Risk and Market Oversight on Capitol Hill on May 22, 2012 in Washington.
Jonathan Ernst | Acesparks
His nomination to lead the SEC by President Joe Biden, and his subsequent confirmation in the Senate, was met with optimism by many in the crypto community, as he is seen as an exercise hand in devising novel financial regulations. .
Gensler, who taught crypto courses at the Massachusetts Institute of Technology, is perhaps best known for his influential tenure as chairman of the Commodity Futures Trading Commission in the Obama administration. While there, Gensler helped design and establish a new oversight system for the swap market, which was largely unregulated prior to the financial crisis.
So, while Democrat Gensler doesn’t necessarily agree with Trump-appointed Pearce on all counts, he may align with wanting a more proactive SEC when it comes to bitcoin regulation.
Denying bitcoin ETF applications not only risks a double standard, but may also expose thousands of investors to some, more dangerous options.
“Complications of Not Approval” [an application] Be strong, because people are looking for other ways to do the same thing they would with an exchange-traded product. They’re looking at companies, perhaps, that are somehow more broadly linked to bitcoin or crypto.”
Bitcoin itself has suffered a violent start to the summer and has seen its price drop by more than 40% over the past three months. Although it is one of the most actively traded digital assets, some market watchers say that bitcoin is at a turning point.
“It looks like it’s getting ready for a $30,000 retest, and that could be significant,” UBS director of floor operations Art Cashin on the NYSE said Thursday. “If you break $30,000, traders will want to see if there is a fraud, cascade selloff.”
It has had its dizzying ups and downs to facilitate bitcoin transactions, as a growing number of businesses and banks, including payments companies Square and PayPal.
Meanwhile, the Bank of New York Mellon said in February that it would begin financing bitcoin, a significant development as it is the oldest bank in the country and a leader in custody banking.
As of late Friday, bitcoin was up 1.6% around $33,550.
Despite the currency’s volatile price swings, Peirce remains convinced that a bitcoin ETF is overdue.
It is not the SEC’s job to accept or reject applications based on investment merits, it said on Thursday, especially if exchanges are meeting statutory requirements to protect investors from fraud.
“Bitcoin is so decentralized now. The number of nodes involved in bitcoin is huge, and the number of people interested in keeping that work decentralized is huge,” he said. “People should make their own decisions: if people don’t want to buy bitcoin because they think it has been manipulated, they shouldn’t buy bitcoin.”