In a landmark decision, the United States Securities and Exchange Commission (SEC) approved the trading of spot Bitcoin exchange-traded funds (ETFs) yesterday, a pivotal moment that has been long anticipated by the industry. However, this decision has not been without its internal controversies, as highlighted by the outspoken SEC Commissioner Hester Peirce, known in the crypto community as “Crypto Mom.”
Notably, the SEC spot ETF approval passed with a 3-2 vote. Three commissioners (Gary Gensler, Hester Peirce, and Mark Uyeda) were in favor of the approval, two against (Caroline Crenshaw and Jaime Lizárraga), as Bitcoinist reported.
Bitcoin ETF Approval Reveals Divide At The SEC
In a detailed and critical statement, Commissioner Peirce chastised the SEC for its extensive delays in approving BTC ETFs, suggesting that these delays have had significant repercussions. “Today marks the end of an unnecessary, but consequential, saga,” Peirce declared, shedding light on the over-decade-long journey to this approval. Her critique centers on the negative impacts this delay has had on investors, the regulatory agency itself, and the cryptocurrency market at large.
Peirce’s statement, aptly titled “Out, Damned Spot! Out, I Say!,” is a poignant reflection of her frustration with the SEC’s handling of Bitcoin ETF applications. She contrasts the treatment of Bitcoin-related ETP (Exchange-Traded Product) applications with the typically more straightforward process for other ETPs.
“It’s evident even to those outside the legal field that BTC-related ETP applications have been handled differently than the many other ETP applications routinely filed and approved over the years,” Peirce pointedly observed.
In her role as Commissioner, a position she has held for six years, Peirce has often been confronted with the question, “When will the Commission approve a spot bitcoin ETP?” Her response has consistently highlighted the puzzling nature of the SEC’s series of denials.
Peirce notes that while Bitcoin-based products have been successfully traded under other regulatory frameworks, such as those governed by the Commodity Futures Trading Commission (CFTC), and while foreign jurisdictions have allowed the trading of spot BTC ETPs, the SEC has remained steadfast in its refusal to permit such products in the US market.
Peirce expressed concern about the SEC’s influence on investor behavior, pushing them towards less efficient means of BTC investment. She cited the approval of Bitcoin futures ETFs in 2021 and Bitcoin futures ETPs in 2022 as more complex alternatives to direct spot products.
“The complexities and management difficulties inherent in these futures-based products inevitably lead to higher costs for investors, which could have been avoided with a spot product,” she explained.
Bias Against BTC
Addressing the SEC’s recent change in stance, Peirce highlighted the lack of substantial new evidence to justify this shift. “The only material change since our last denial of a similar application was a judicial rebuke,” she stated, implying that the SEC’s previous rejections were influenced by a bias against BTC rather than a balanced assessment of market readiness or investor protection concerns.
Peirce did not shy away from discussing the wider implications of the SEC’s approach. “Our arbitrary and capricious treatment of these applications not only harms our reputation in the crypto sector but also erodes public trust in our ability to regulate the markets effectively,” she warned. She highlighted the diversion of staff resources from other critical work and the confusion created among the public about the SEC’s role.
Despite her critical analysis, Peirce concluded her statement on a positive note, emphasizing the importance of investor choice. “I am celebrating the right of American investors to express their views on Bitcoin by participating in the market for spot Bitcoin ETPs,” she said, applauding the market participants for their steadfastness in the face of regulatory hurdles.
In summary, while the SEC’s approval of spot Bitcoin ETFs is a significant milestone for the integration of cryptocurrencies into mainstream financial markets, Commissioner Peirce’s statement provides a candid look into the internal challenges and conflicts within the SEC.
At press time, BTC traded at $47,090.
Featured image from Franknez.com, chart from TradingView.com