U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce has slammed her agency for the delay in approving spot bitcoin exchange-traded funds (ETFs). “Our arbitrary and capricious treatment of applications in this area will continue to harm our reputation far beyond crypto. Diminished trust from the public will inhibit our ability to regulate the markets effectively,” the commissioner stressed.
‘Diminished Trust From the Public Will Inhibit Our Ability to Regulate the Markets Effectively’
U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce issued a statement following the approval of 11 spot bitcoin exchange-traded funds (ETFs) by the SEC.
“Today marks the end of an unnecessary, but consequential, saga,” Peirce began. “More than ten years after the filing of the first spot bitcoin exchange-traded product (‘ETP’) application, the Commission finally has approved multiple applications by exchanges to allow the listing and trading of spot bitcoin ETPs. This saga likely would have spanned well beyond a decade were it not for the DC Circuit-ex-machina.”
Noting that “Bitcoin-based products have been trading for years under other regulatory regimes,” she stressed: “The Commission should have drawn comfort from the successful launch and smooth trading of these products, even through market stress and volatility. Instead, until today, the Commission remained steadfast in its unwillingness to let spot bitcoin ETPs into US markets.” She added:
In the meantime, the Commission has driven retail investors to less efficient means of attaining bitcoin exposure in the securities markets.
One of the ways retail investors had to gain exposure to bitcoin and the crypto market is through bitcoin futures exchange-traded funds, which the Commission did not have a problem approving. “These futures-based products are more complex and more difficult to manage than the spot product, which can translate into higher costs for investors,” Peirce noted. “But, until a court reminded us that our ‘unexplained discounting of the obvious financial and mathematical relationship between the spot and futures markets falls short of the standard for reasoned decisionmaking,’ we persisted in denying a spot bitcoin ETP.”
The Commission, rather than admitting error, offers a weak explanation for its change of heart.
“In the past, the Commission, allowing our prejudice against the underlying asset to get in the way, has rejected applications on the basis that the bitcoin market was still immature and that there were outstanding manipulation concerns,” she detailed.
“We squandered a decade of opportunities to do our job. If we had applied the standard we use for other commodity-based ETPs, we could have approved these products years ago, but we refused to do so until a court called our bluff. And even now our approval comes only begrudgingly, as demonstrated by our continued insistence that these products satisfy a correlation test we have not demanded of prior commodity-based ETPs,” Commissioner Peirce stated.
“Today’s order does not undo the many harms created by the disparate treatment of spot bitcoin products,” she added, elaborating:
Our arbitrary and capricious treatment of applications in this area will continue to harm our reputation far beyond crypto. Diminished trust from the public will inhibit our ability to regulate the markets effectively.
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