Why does SEC Commissioner Hester Peirce fight for a Bitcoin ETF?

14 Dec, 2018
by David Borman
Analysis
Why does SEC Commissioner Hester Peirce fight for a Bitcoin ETF?

Hester Peirce is a Commissioner of the Securities and Exchange Comission (SEC) and has repeatedly made headlines in the crypto world this year as she has been perhaps the most outspoken voice for the approval of a Bitcoin ETF. Although this has so far failed to lead to realization, she has been clear in her view that the SEC needs to embrace this new technology with realistic regulation, not ignore it or ban it outright.

Commissioner Peirce graduated from Case Western Reserve University with a BA in Economics and then went on to get her JD from Yale Law School, graduating in 1997. She worked as a clerk for Judge Roger Barry Andewelt on the Court of Federal Claims and then for the law firm Wilmer, Cutler & Pickering.

After that she got her first work at the SEC, first as a Staff Attorney and then as counsel to Commissioner Paul S. Atkins. This led to her joining Senator Richard Shelby’s Committee on Banking, Housing, and Urban Affairs. During this time she oversaw aspects of regulatory recovery from the 2008 financial crisis and the implementation of the Dodd-Frank Act.

It is perhaps not surprising that Peirce eventually took the views on cryptocurrency she has, as it is the 2008 financial crisis that also inspired the creation of Bitcoin in the first place. In some ways, both Peirce and crypto were forged by the fires of this crisis.

Peirce then went on to become a Senior Research Fellow and Director of the Financial Markets Working Group at the Mercatus Center at George Mason University. During this time her research focused around the role of regulation in working markets.

Finally, in 2018 she was appointed Commissioner at the SEC by President Donald Trump, a role she still has to this day.

Her role in defending a path to a Bitcoin ETF

Commissioner Peirce first got the attention of the crypto community in July of this year when she famously dissented from the SEC's decision to deny rule changes that would have allowed for a Winklevoss Bitcoin ETF.

Peirce feels the mistake the SEC made was that it used the reasoning that the market for Bitcoin was too underdeveloped and risky for investors. Peirce points out that it is not the job of the SEC to determine the safety of the market but rather create the rules that protect investors from unsafe markets. Ironically, rejecting new rules because the market isn't safe is only reinforcing an unsafe market.

In Peirce's own words:

"More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order. More generally, the Commission’s interpretation and application of the statutory standard sends a strong signal that innovation is unwelcome in our markets, a signal that may have effects far beyond the fate of bitcoin ETPs."

Taking such a vocal stance on the subject, and a very reasonable and well explained one at that, immediately attracted the love of the cryptocurrency community and earning her the unofficial title of “Crypto Mom.”

Read more: Crypto has a new 'Crypto Mom', and her Twitter following is growing by the minute

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What Commissioner Peirce is up to lately

Since the summer Peirce has still been going on the record that cryptocurrencies need to be taken seriously and that regulation, though it shouldn't be stifling, is needed. In September she gave a speech in which she compares SEC regulation to motherhood and states she would rather be a “free range mom” than a “helicopter mom,” basically saying you need some rules but also room for your “children” (markets) to grow on their own. After the speech she tweeted this in a not-so-subtle manner:

Most recently Peirce has been fairly honest and realistic when addressing Bitcoin ETFs in public. She recently had a sit-down with Erica Williams at the Digital Asset Investment Forum in Washington DC, in which she was clear that there's no guarantee of a BTC ETF any time soon:

Despite this, it seems Hester Peirce is still committed to changing the minds at the SEC:

Hopefully, as the decision looms on the VanEck SolidX Bitcoin ETF decision, recently pushed off until February, Commissioner Peirce will be successful in that role. Until then, it is good to see at least one champion of crypto inside of the SEC, and one who is in fact well spoken and rational. This could increase the chances of people taking the new technology seriously, as it currently faces a lot of push-back.

As the larger crypto saga unfolds Commissioner Peirce will undoubtedly play a key role in the road to regulation and adoption, and you can be sure Chepicap will be here to report all the key events revolving around cryptocurrency's newly proclaimed “mom.”

Read more: SEC's Crypto Mom on Bitcoin ETF approval: "Don't hold your breath"

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