SEC commissioner voices support for bitcoin ETF

August 03, 2018
Chris Wheal

Cameron and Tyler Winklevoss: the twins’ bitcoin-based ETF has been rejected by the SEC

Hester Peirce, a member of the US Securities and Exchange Commission, says that she doesn’t agree with the regulator’s recent decision to reject the application from Cameron and Tyler Winklevoss, founders of crypto exchange Gemini, to list the first bitcoin-based exchange-traded fund (ETF) on a regulated exchange.

In an interview with CNBC Peirce, who formerly worked as a staff attorney at the SEC and returned as a commissioner earlier this year, indicated her support for a bitcoin ETF.

“I’m delighted to have the opportunities to weigh in on debates on cryptocurrencies,” said Peirce. “I think we have an important role to play telling the US and world that our capital markets are open to innovation and that’s sort of what drove me to come back to the agency as commissioner.”

Dissenting voice

SEC commissioner Hester Peirce

Hester Peirce dissented from the SEC’s decision: Crownfund Insider

The SEC normally has a board of five commissioners, but currently there are only four and the Winklevoss’ application for a bitcoin ETF was rejected 3-1, with Peirce’s the only dissenting voice.

Peirce added that decisions are normally taken at staff level before being presented to the commissioners. The Winklevoss’application was initially rejected at that level before the decision was appealed against.

The Commission had claimed the proposed change was not in line with the governing statute, the Securities Exchange Act, but she dissented from this view. “I take the position that actually the change that was put before us was consistent with the Exchange Act so there’s no reason for us to not allow this product to go ahead,” Peirce told CNBC. “Therefore I would have let it go forward whereas my colleagues believe that it should not go forward.”

Rather than considering the specific market where the proposed ETF product would be traded, the SEC had looked at the underlying asset, bitcoin, and its possible price manipulation in markets, Peirce said. She suggested that this is beyond the agency’s jurisdiction and noted that in gold and oil markets, the actual underlying assets are not scrutinised.

“It’s not within our purview to go and look at how those markets are actually working, we should be focused on the market that’s trading the security, which in this case would be the exchange-traded product,” she added.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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