Lame ‘Old’ SEC Should’ve Approved a Bitcoin ETF Already, Scolds Crypto Mom

Journalist:
Samantha Chang @Samantha_Chang
June 26, 2019

SEC Commissioner Hester Peirce (“Crypto Mom”) says the Securities and Exchange Commission should’ve approved a bitcoin ETF already and slammed the agency for being a backward relic.

Hester Peirce to SEC: Wake Up to the Future

Moreover, Peirce is concerned that the murky regulatory framework in the United States will chase crypto businesses offshore.

“[The SEC has the attitude of] ‘I don’t like that marketplace. Bitcoin markets are messy, so we don’t like them,” Peirce said. “So we’re not going to allow that product that’s based on bitcoin to trade in our markets.'”

Peirce says that’s the arcane attitude the SEC has adopted toward bitcoin, and it’s counterproductive. The Crypto Mom made the remarks at a June 25 forum hosted by the Heritage Foundation (video below).

Peirce says other financial products are also “messy” but the SEC doesn’t pull the plug on them, so why can’t it adopt the same open-mindedness toward crypto?

Crypto Mom: SEC’s Inflexibility Stifles Growth

Hester Peirce is one of five commissioners at the Securities and Exchange Commission. They each have differing opinions on cryptocurrencies. Peirce was affectionately nicknamed “Crypto Mom” because of her embrace of digital currencies.

In July 2018, Peirce was the only SEC commissioner who wanted to approve the bitcoin ETF application submitted by the Winklevoss twins, Tyler and Cameron.

Peirce says her anti-crypto colleagues rejected the Winklevoss twins’ bitcoin ETF application because they’re uncomfortable with new ideas. She says that’s a terrible attitude that stifles innovation.

“The agency is old and has not historically been great with innovation. When a regulator is presented with something new, our safest response is to say, ‘Sorry, why don’t you stick with the old traditional stuff? Because we know how to regulate that.’

That’s not a healthy state of being. We want people to come in with innovation. We want to see change, because those innovations ultimately serve investors well.”

SEC Is Divided on How to Regulate Crypto

As CCN reported, the SEC twice rejected a bitcoin ETF application submitted by the Winklevoss twins. Tyler and Cameron Winklevoss own the New York-based crypto exchange Gemini.

The rejections — in March 2017 and again in June 2018  — cited the twins’ failure to demonstrate how their bitcoin ETF could prevent market manipulation.

SEC Approval of VanEck Bitcoin ETF Uncertain

In May 2019, the SEC again delayed making a decision on the VanEck bitcoin ETF. So far, it doesn’t appear that approval will occur anytime soon.

Outgoing SEC commissioner Robert Jackson, who’s a crypto skeptic, admits that the agency is divided over how to regulate crypto.

Jackson said the agency will view crypto more favorably when the market becomes more transparent and more liquid.

In 2018, the SEC launched a mass crackdown on shady ICOs, fueling demands for regulatory clarity. Jackson blames overzealous law firms for enabling the proliferation of sham ICOs that tainted the industry.

“Early in this market, some lawyers out on the West Coast got out ahead of their skis,” Jackson says. “They gave advice that these things were not securities.”

Last modified (UTC): September 9, 2019 23:53

Samantha Chang @Samantha_Chang

Samantha Chang is a New York City-based financial editor who writes about crypto and business at . She is a law school grad and an alum of the University of Pennsylvania. You can reach her on Twitter at Samantha Chang or email her at schang121@juno.com.