SEC member dissents from ETF decision

27 Jul, 2018
by David Robb
SEC member dissents from ETF decision

A member of the SEC has officially dissented from yesterday's decision regarding crypto ETFs. Commissioner Hester Peirce released a three-part statement declaring that the objections to the proposed rule changes were wrong.

Peirce claims that the SEC's deliberation was overly focused on the underlying Bitcoin 'spot market', as opposed to the ETF in question, the Winklevoss Bitcoin Trust. In her view, the SEC's obligation is just to ensure that the BZX exchange, where the Winklevoss' fund was due to be listed, can protect investors and prevent manipulation of the particular ETF product itself.

According to the statement, the Securities Exchange Act "instructs the Commission to determine whether “[t]he rules of the exchange” are... “designed to prevent fraudulent and manipulative acts and practices [and] to promote just and equitable principles of trade,” and “are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers.”[3] It says nothing about looking at underlying markets, as the Commission often has done in its orders."

Not only is it unfair to consider potential Bitcoin price manipulation when ruling on a Bitcoin ETF, the denial of access to the fund could also contribute further to the very problems that the law is designed to prevent.

In the second part of the statement, Peirce goes on to point out that the order "unintentionally undermines investor protection. It precludes investors from accessing bitcoin through an exchange-listed avenue that offers predictability, transparency, and ease of entry and exit."

The final part of the statement insists that the SEC may well be holding back progress with their decision, and that they shouldn't be acting as "gatekeepers of innovation".

In a sentiment that many crypto devotees will probably echo, she states that "investors...are generally better judges about these things than we are". Peirce's statement has already been met with some enthusiastic approval from many observers:

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