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Why The SEC Approved All 11 Spot Bitcoin ETF Applications: Hester Peirce “Crypto Mom” Shares Insights

Last Updated January 16, 2024 1:44 PM
Teuta Franjkovic
Last Updated January 16, 2024 1:44 PM

Key Takeaways

  • Hester Peirce believes the SEC’s approval of Bitcoin spot ETFs is a significant milestone for cryptocurrency.
  • She criticizes the SEC’s hesitancy around Bitcoin-related products.
  • Peirce highlights the challenges and ambiguities faced by the SEC in defining legal frameworks for digital assets.

In a recent episode of the ‘Coin Stories’ podcast,  the spotlight shone on Hester Peirce, known in the crypto community as ‘crypto mom’ and a member of the United States Securities and Exchange Commission (SEC).

The episode delved into the long-awaited SEC approval of Bitcoin spot Exchange Traded Funds (ETFs), a development that marks a significant milestone in the integration of cryptocurrencies into mainstream financial markets.

SEC Should Remain Neutral on Investment Decisions

Peirce, known for her independent views within the SEC, started the conversation with a standard disclaimer emphasizing that her views were personal and not necessarily those of the SEC or her fellow Commissioners.

The discussion moved to the recent approval of Bitcoin spot ETFs, a decision that was, in Peirce’s view, overdue. She described this development as the culmination of an “unnecessary but consequential saga”. Peirce pointed out the SEC’s delay in approving these ETFs had driven retail investors towards less efficient avenues for Bitcoin exposure.

She said :

“You never want the regulator to be, as you say, picking which one is going to be the winner. And this has been a long process over 10 years. People have been coming in with applications, they’ve been getting kicked back, people have come in with more data. And so it’s really hard to say who was first to the gate, and that’s why I think having everyone go out at the same time made a lot of sense.”

During the podcast, Peirce reflected on the SEC’s hesitancy around Bitcoin-related products. She noted that the agency took a cautious approach due to Bitcoin being a relatively new asset class. Peirce expressed her belief that the SEC’s role isn’t to dictate investment choices but to ensure investment products meet legal standards.

Gensler’s Views Occasionally Conflicted with Crypto Community

One key aspect of the discussion was the role of SEC Chair Gary Gensler, whom Peirce identified as a decisive vote in the approval of the Bitcoin ETFs. The conversation touched upon the contrasting perspectives on Bitcoin within the SEC, with Gensler’s views sometimes appearing conflicted to the crypto community.

She said :

“The chair, Gary Gensler, was the deciding vote. He seems like he’s very pro Bitcoin, given his MIT lecture series. But then recently he was just on CNBC saying this is a very speculative asset mostly used for illicit activity. So I think a lot of people in the community are kind of confused.”

In terms of the broader implications for the crypto market, Peirce highlighted the Bitcoin and blockchain technology. She emphasized a potential convergence of blockchain technology and artificial intelligence, which could lead to advances.

A Need for Clear SEC Guidelines in Digital Asset Classification

The conversation also veered into the challenges and ambiguities faced by the SEC in defining legal frameworks for digital assets. Peirce stressed the need for precise legal analysis in categorizing digital assets as securities and the importance of regulatory clarity.

She said :

“I think that there’s a lot of legal analysis that just hasn’t been very precise. You can have an object that is not itself a security, that is sold as is sold in a securities transaction as part of an investment contract. So I can sell you any physical object along with promises that I’m going to take care of it for you and it’s going to rise in value.

“You don’t have to do any work that could well be a securities transaction. When I sell that to you because I’m not only selling you an object, but I’m selling you promises along with it. And it’s the same with a digital object. If you take a digital object and you you you sell it along with promises, it can turn into a securities transaction.”

Peirce’s insights offer a deep dive into the complexities and nuances of regulating emerging technologies like cryptocurrencies. Her perspective sheds light on the delicate balance regulators must strike. They need to foster innovation, but also ensures investors are protected in the rapidly evolving world of digital assets.

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