SEC Commissioner Hester Peirce has publicly expressed her disagreement with yet another rejection of bitcoin ETFs.
In a lengthy official note published on the SEC’s website, Peirce expressed her disagreement specifically with the agency’s approach to these bitcoin-based products, describing it as “frustrating because it evinces a stubborn stodginess in the face of innovation”.
She then adds:
“The irony is that, in taking this approach, the Commission wanders into the unbounded, dangerous territory of merit regulation for which the Commission is ill-equipped. Because the Commission’s order applies an inappropriate standard under Section 6(b)(5) of the Exchange Act, I respectfully dissent”.
In reality, the ironic aspect is, above all, the fact that Hester Peirce is a member of that same Commission which has rejected the umpteenth request to issue bitcoin ETFs, which is perhaps the reason why she decided to publish this note which is clearly contrary to the decision.
In fact, the SEC yesterday rejected yet another proposal to put a bitcoin-based product on the market, listed and traded on a national stock exchange under its control.
It is now quite clear that the agency has ingrained prejudices against these instruments, particularly due to the risk of manipulation of the bitcoin market.
In this respect, Peirce states:
“This line of disapprovals leads me to conclude that this Commission is unwilling to approve the listing of any product that would provide access to the market for bitcoin and that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products—and only to bitcoin-related products”.
These words are not only explicatory, but they are also very clear. Not least because the other US Futures Markets Commission, the CFTC, has not only already approved several bitcoin-based financial products, but has also expressed some disbelief towards the SEC’s attitude.
Hester Pierce’s words are in fact a rather harsh and direct accusation against precisely those prejudices that seem to be the real cause of the SEC’s obstinacy in not wanting to open up to this new world, even at some point she herself says:
“I recognize that innovation involves risks, but it is investors who should get to choose the winners and the losers of the market. Regulators should not impede investor choice; rather, they should ensure that investors have access to accurate disclosures about the range of available products, including their risks”.
While it is true that the SEC’s job is to protect investors, Pierce’s comments, along with what has already been done by the CFTC, show that if the SEC wanted to do so, steps could be taken in this direction.
Therefore, that of the Securities and Exchange Commission seems more like an arbitrary and discretionary decision rather than the result of a careful study of the industry and a mere application of the rules in force.
In short, not all investors are like Warren Buffett, and this is perhaps not clear to everyone. The SEC’s attitude to financial innovation seems similar to that of old-school investors such as Buffett, who are reluctant to delve deeper into technological innovation.
“Erecting impediments, limiting people’s liberty to choose for themselves, and resisting innovation achieves none of these benefits. They demonstrate instead that the Commission is unprepared to confront and embrace the new opportunities that we can expect entrepreneurs to develop. Meanwhile, American investors will still seek access to products they want, but without the vaunted protections of our securities laws, while American entrepreneurs will seek their fortunes elsewhere, taking their talents and ingenuity with them”.