By CCN.com: An SEC commissioner who’s a bitcoin skeptic admits the agency is experiencing internal disagreements over how to regulate crypto. However, Robert Jackson says the SEC will be more likely to approve crypto proposals, such as a bitcoin ETF, once the industry matures.
Jackson is suspicious of bitcoin, but says the agency will view cryptocurrencies more favorably when the market becomes more transparent, more liquid, and adds bigger players.
Speaking at the CB Insights’ Future of Fintech conference, Jackson said:
“When the markets reach that stage, I fully believe we’ll have an SEC that’s ready to move forward with approving [a bitcoin ETF].”
Jackson: Crypto Market Isn’t Transparent or Liquid Enough
As CCN.com 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 fraud and market manipulation.
In May 2019, the SEC again delayed making a decision on the VanEck bitcoin ETF. While the industry was glad that the postponement wasn’t a rejection, it doesn’t bode well for approval this year.
Robert Jackson is one of five SEC commissioners and the lone Democrat. There are currently two Republicans (Elad Roisman and Hester Peirce) and one Independent (Chairman Jay Clayton) running the Securities and Exchange Commission.
Jackson claims the agency is reluctant to approve crypto proposals because it wants to protect consumers from cons and shams. Specifically, Jackson says the crypto industry has not fulfilled the “basic market requirements” to enable mass trading.
However, Jackson will step down from the SEC to teach at NYU Law School this fall. His term officially ended on June 5, but he could extend it until 2020 unless he gets replaced.
“It is our mutual expectation that he will return to NYU Law to teach in the fall,” said a rep for the school.
Five SEC Commissioners Have Differing Opinions on Crypto
While Jackson is a crypto skeptic, his colleague Hester Peirce is so bitcoin-friendly that she has been nicknamed “Crypto Mom” (an ironic moniker considering she has no children).
As a result of these differing opinions within the SEC, Jackson says the commissioners are often at odds when discussing crypto regulations.
“We have to take principles that are 80 years old and 90 years old and apply them to [brand-new] technology. And we often disagree about exactly how to do that.”
In July 2018, Peirce was the only one of the five SEC commissioners who wanted to approve the Winklevoss twins’ bitcoin ETF application. Peirce ― an appointee of President Donald Trump ― blasted the SEC’s rejection of the Winklevoss bitcoin ETF application.
At the time, she said the rejection would stifle innovation in the budding industry and put the SEC in the awkward position of playing babysitter for investors. Peirce reaffirmed these sentiments in February 2019, when she warned that the SEC’s “arcane rules” will likely delay the approval of a bitcoin ETF this year.
Jackson Blames Shady Lawyers for Sham ICOs
The SEC has launched a massive crackdown on shady ICOs, fueling calls for regulatory clarity. Robert Jackson blames overzealous law firms for enabling the proliferation of sham ICOs that have roiled 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. And candidly, my reaction as a lawyer and human when reading that advice, [was that] it was aggressive.”